-

Q C C ~ , ' ? ~

May 1985 -)

SHIP PRODUCION COMMITTEE

FACILITIES AND ENVIRONMENTAL EFFECTS
OUTFITTING AND PRODUCTION AIDS
INDUSTRIAL ENGINEERING FOR SHIPBUILDERS
SHIPBUILDING STANDARDS THE NATIONAL
DESICNlPRODUCTlON INTEGRATION SHIPBUILDING
HUMAN RESOURCE INNOVATIONS RESEARCH
SURFACE PREPARATION AND COATINGS PROGRAM
FLEXIBLE AUTOMATION
EDUCATION AND TRAINING
WELDING

Human Resource Innovation in Shipbuilding

and Ship Repair Workshop Proceedings

U.S. DEPARTMENT OF TRANSPORTATION

Maritime Administration
in cooperation with
The University of Michigan
1. R-rt No. 2. Covemnmt Accession No. 3. Reciplmt's Cotalog No.

UMTRI-85-43
4. Title m d Subtitle 5. Report Dote
Human Resource Innovation in Shipbuilding May 1985
and Ship Repair - Workshop Proceedings 6. P n f o m i n g Organ~zotionCode

8. Pmrfoming Organization Report No.

7. Aulhods)
Michael Gaffney UMTRI-85-43
9. Perterming Or misotion Nome m d Addrens 10. Work U n ~No.
t (TRAIS)
cornelf University
N.Y. State School of Ind. and Labor Relations ' 11. c ~ c~~~~
~ N ~ ~. , ~ ~ ~
P.O. BOX 1000 DM-91-84-C-41045
Ithaca, New York 14853 1% TYPOof Report and Per~odCovered
12. Sponsoring Agency Nan. and Address

Department of Transportation
Final
Maritime Administration
14. Sponsoring Agency Coda
Washington, D.C. 20590
IS. Supplementory Notes
A project of the SNAME Production Committee Education Panel (SF-9)
*Under sub-contract to Transportation Research Institute, The University
of Michigan.
16. Abstroct
These proceedings document the second national Workshop On Human
Resource Innovation in ~hipbuilding/ShipRepair, which was held on
November 26th-28th, 1984. The text of the proceedings consists of
case studies and technical reports presented by shipbuilding labor and
management members from around the world. The objective of the work-
shop was to introduce new management practices and organizational
structures designed to better utilize the shipbuilding human resource.
This workshop was designed to convey its theme to an audience consist-
ing of representatives from United States and overseas shipyards,
labor unions, The United States Department of Labor, The Maritime
Administration, and major universities.

17. Key Words 18. Distributian Stotmmrrt

Labor relations, human resource Available to the U.S. public

innovation, social technology through NTIS, Springfield, VA
22161

m. Security Clmssif. (of this pog.1 21. No. of Poges 22. Price

Unclassified 57 -
 - -- - -- - --

HUMAN RESOURCE INNOVKHON

IN SHIPBUILDING AND
SHIP REPAIR
.Workshop Proceedings*

Sponsored by the
Education Panel (SF91 Ship Production Committee,
Society of Naval Architects and M a r i i Engneers,
and the National Shipbuilding Research Program

May 1985

Contract Na DTMA-9 1-844-4 1045

The University of Michigan
Ann Arbor, Michigan
 FOREWORD
Thlc human resource is the single most important asset employed in the production of ships.

This document is the proceedings of a second annual workshop devoted to the dissemination of new
managerial practices and organizational concepts developed for implementation within United States ship-
yards. The proper implementation of these new concepts has radically improved the productivity at certain
shipbuilding firms as indicated by the case studies in this text.

The overall objective of the workshop was to examine both the content and the process of human resource
innovation that is evident in shipbuilding throughout the world today.

The workshop was oriented to allow for presentation of case studies and professional papers in the
following topical sequence:
Case Studies
United States commercial shipyard;
United States naval shipyard;
Japanese commercial shipyard;
British commercial shipyard;
Bureaucratization and Professionalism as Options in the Redesign of Shipbuilding Organizations
Technological and Organizational Change
Employee Involvement
Alignment of Management Structures in Support of Labor-Management Cooperation Efforts
Break Out Workshops

The workshop was held November 26-28. 1984, in Baltimore Maryland. It was produced and directed by
the SP-5 Human Resource Innovation Panel. It was sponsored by the SP-9 Panel of Education and Training.
Participants included representatives of U.S. and foreign shipyards, labor unions, universities, research
organizations, and the U. S , government.

Project Manager and workshop facilitator was Dr. Michael E. Gaffney, Program Manager of the SP-5
Panel and Associate Director of Management Programs, New York State School of Industrial and Labor
Relations, Cornell University. Special thanks are in order to Theresa Flynn, Sally Klingel, Leslie Rumpeltes,
Lora Studwell, Keiko Yamanaka, and Andrew Lisak for their editing expertise.

This workshop proceeding is one of many projects managed and cost-shared by The University of
Michigan for the National Shipbuilding Research Program. The program is a cooperative effort of the
Maritime Administration's Office of Advanced Ship Development, the U.S. Navy, the U.S. shipbuilding
industry, and selected academic institutions.
 CONTENTS

...................................................................................
Participants 6
Workshop Agenda .............................................................................
10
Welcome and Introductions .....................................................................
11

Presentations
Case Study #1
Bethlehem Steel Corporation. Beaumont Shipyard .................................................14
Case Study #2
Technological Change and Worker Participation
in the Japanese Shipbuilding Industry ............................................................
20
Bureaucratization and Professionalism as Options
in the Redesign of Shipbuilding Organizations:
Notes on the German Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
...
Technological and Organizational Change
in European Shipbuilding .......................................................................
32
Employee Involvement at Bethlehem Steel:
Awareness and Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
...
Alignment of Management Structures in Support
of Labor-Management Cooperation Efforts ........................................................
38
Case Study #3
British Shipbuilders ............................................................................
42
Case Study #4
Puget Sound Naval Shipyard ....................................................................
49

What Does All of This Mean to Unions? .........................................................

53
How to Start and Sustain Employee
Involvement Efforts ............................................................................
54
Resistance to Change ...........................................................................
54
Nuts and Bolts of Problem-Solving Teams ........................................................
55

References ..................................................................................
56
 PARTICIPANTS

YARDS BRITISH SHIPBUILDERS - GOVAN YARD

BATH IRON WORKS Donald Macphail
Chief Planner
Ron Bancroft
Senior Vice President, Finance & Administration
GENERAL DYNAMICS - QUINCY YARD
Sheryl Collamore
Assistant to Production Manager Noreen Zupnick
Employment Representative
Stephen Kent
Employee Involvement Coordinator
GENERAL DYNAMICS - ELECTRIC BOAT -
James Koehneke
Manager, Employee Communications & Involvement QUONSET POINT
Ron Smaldone
BAY SHIPBUILDING Manager, Industrial Relations

Randy LaCross
Sheetmetal Foreman GENERAL DYNAMICS - ELECTRIC BOAT-
GROTON
Jordon Woods
Manager, Industrial Relations Fred Miller
Staff Assistant to V.P. Operations
BETHLEHEM STEEL CORP. - BEAUMONT Tom Sotir
YARD Director, Industrial Relations

Barry Long
Assistant General Manager GENERAL SHIP CORPORATION
Ken Smith Spencer French
Employee Involvement Coordinator Vice President, Operations

BETHLEHEM STEEL CORP. - CORPORATE JACKSONVILLE SHIPYARD

Ed Connolley John Stewart
Senior Human Resource Consultant Personnel Manager
Frank Long
General Manager, Human Resources KAISER STEEL CORPORATION
Marine Construction Group
William Mertens
BETHLEHEM STEEL CORP. - SPARROWS Director of Industrial Relations
POINT YARD
MARE ISLAND NAVAL SHIPYARD
George Birtcher
Management Co-chairman, Employee Involvement Committee Richard Casarotti
Special Assistant to Planning Officer
Clarence Harris
Management Employee Involvement Coordinator Bruce Christensen
Head Nuclear Engineer
Henry J. Jones
Division Superintendent, Production Services Joseph Gerlach
Head, Productivity Office
Dan Romanchuk
Manager of Administration Stan Hogberg
Superintendent, Outside Machine Shop
Stephen Sullivan
Human Resources Manager A1 Leveque
Head, Management Appraisal Div.
Paul Tipton
Superintendent, Electrical Shop
NATIONAL STEEL & SHIPBUILDING CO. TODD PACIFIC SHIPYARDS CORP. -
SEATTLE DIVISION
Austin Herrick
Superintendent, Machinery Steven Stanford
J.C. "Chris" Prosser Manager of Public Relations
Vice President of Production
Dan Stravinski
Supervisor, Labor Relations LABOR
Erwin Strauss INTERNATIONAL BROTHERHOOD OF
Program Director, Repair BOILERMAKERS, IRON SHIP BUILDERS,
BLACKSMITHS, FORGERS AND HELPERS
NEWPORT NEWS SHIPBUILDING
Donald Forman
J.R. Baker Business Manager
Director, Labor Relations Lodge #568, Tacoma
R.E. Hockett Lee Franklin
Manager, Industrial Engineering International Representative
Lodge #72, Portland
NORFOLK NAVAL SHIPYARD David Meehan
Business Manager
Carl Braun Lodge #6, Oakland
Workload Production Control Head Peter 0 . Peterson
Eugene Scholl President
Production Superintendent Lodge #449, Sturgeon Bay
Joseph Pilato
NORFOLK SHIPBUILDING AND DRYDOCK Business Manager
co. Lodge #104, Seattle
G.L. "Bud" Rauwerda
James R. Wermeister Shop Steward
Director, Industrial Relations Lodge #587, Beaumont
Union Employee Involvement Coordinator, Bethlehem Beaumont
NORTHWEST MARINE Joseph Weimer
Secretary/Treasurer
William McCauley Lodge #449, Sturgeon Bay
Superintendent
UNITED BROTHERHOOD OF CARPENTERS
PETERSON BUILDERS AND JOINERS OF AMERICA
Douglas Washburn Charles Tice
Director of Marketing President
Local #2167, Appleton
PUGET SOUND NAVAL SHIPYARD James Moore
Business Representative
Wayne Williams Local #2167, Appleton
Special Projects Officer

TACOMA BOATBUILDING INTERNATIONAL BROTHERHOOD OF

ELECTRICAL WORKERS
Susan McLain
Director of Compensation & Benefits William J. Leeman
Assistant Business Manager
Local #158, Green Bay
TODD PACIFIC SHIPYARDS CORP. - L.A.
Harvey Naumann
DIVISION Shop Steward
Local #569, San Diego
Michael Fernandez
Production Manager Steve Workoun
Shop Steward
Local #569, San Diego
INTERNATIONAL FEDERATION OF CORNELL UNIVERSITY
PROFESSIONAL AND TECHNICAL
Michael E. Gaffney
ENGINEERS Programs for Employment and Workplace Systems
Illah Hafey Lois Gray
President Associate Dean - School of Industrial and Labor Relations
Local # l 1, Vallejo
Donald Kane
Co-Director, Programs for Employment and Workplace Systems
INDUSTRIAL UNION OF MARINE AND
Sally Klingel
SHIPBUILDING WORKERS OF AMERICA Graduate Student
School of Industrial & Labor Relations
Robert Bull
Vice President Peter Lazes
Local #33, Baltimore Co-Director, Programs for Employment and Workplace Systems
Dave Case Andy Lisak
Alt. Shop Steward Graduate Student
Local #33, Baltimore School of Industrial & Labor Relations
Union Employee Involvement Committee
Bethlehem, Sparrows Point Heinz Dieter Meyer
Graduate Student
Joseph Godsey School of Industrial & Labor Relations
Shop Steward
Local #33, Baltimore Leslie Rumpeltes
Graduate Student
Union Employee Involvement Coordinator
Bethlehem, Sparrows Point School of Industrial & Labor Relations

James Harmon Keiko Yamanaka

Executive Secretary Graduate Student
Department of Sociology
Local #33, Baltimore
Kevin Sullivan
Regional Director, National
CORE GROUP
San Pedro
Jess Christman
Partner
METAL TRADES COUNCIL Randy Duke
Partner
Ken Taylor
Chief Steward George Gates
Mare Island Naval Shipyard Consultant

UNITED ASSOCIATION OF JOURNEYMEN DEPARTMENT OF LABOR

AND APPRENTICES OF THE PLUMBERS,
STEAMFITTERS AND PIPEFITTERS OF
THE UNITED STATES AND CANADA
Gary Brozek
Assistant Business Agent
Local #298, Green Bay
UNITED STEELWORKERS OF AMERICA
William Batt
Bureau of Labor-Management Relations & Cooperative Programs
Ron St. Cyr
Deputy Under-Secretary
for Labor-Management Relations & Cooperative Programs
John R. Stepp
Acting Associate Deputy Under-Secretary
for Labor-Management Relations & Cooperative Programs

John Eck
Local #1374, Lebanon HOSE1 UNIVERSITY
Union Employee Involvement Coordinator
Bethlehem, Lebanon Hideaki Okamoto
Chairman, Department of Business and Management

OTHER MARITIME ADMINISTRATION

AMERICAN MANAGEMENT SYSTEMS Nancy Harris
Industrial Specialist
Jack Garvey
Consultant
Virgil Rinehart UNIVERSITY OF MICHIGAN
Director, Office of Advanced Ship Development & Technology
Howard Bunch
Bob Schaffran NAVSEA Professor of Ship Production
Program Manager, National Shipbuilding Research Program

UNIVERSITY OF NORTH CAROLINA

NATIONAL ADVISORY COMMITTEE ON
OCEANS AND ATMOSPHERE John Bunch
Graduate Student
Steve Risotto Department of Organizational Behavior
Marine Policy Analyst
 AGENDA

November 26 (First Day) 10:45 Case Study #2 - Japan

Hideaki Okamoto, Chairman of the Department of Business and
7-1 1:00 Reception
Management at Hosei University

November 27 (Second Day) 1:15 Bureaucratization and Professionalism As Options in the

Redesign of Shipbuilding Organizations: Notes on the German
8:30 Welcome, Introductions Case
Frank Long, Chairman of the Human Resource Innovation Panel Heinz Dieter Meyer, New York State School of Industrial and
(9'5) Labor Relations at Cornell University
Michael E. Gaffney, Program Manager of the Human Resource
Innovation Panel (SP5) 2:15 Technological and Organizational Change in European
Shipbuilding
Howard Bunch, Chairman of the Education & Training Panel
(SP9) Peter Lazes, Programs for Employment and Workplace Systems
at Cornell University
8:45 Maritime Administration
3:15 Employee Involvement at Bethlehem Steel: Awareness
Virgil Rinehart, Director of the Office of Advanced Ship Devel- and Application
opment & Technology
John Eck, Union Employee Involvement Coordinator at Bethle-
hem Steel Corporation at the Lebanon Plant
8:50 Department of Labor
John R. Stepp, Acting Associate Deputy Under-Secretary for 4:15 Alignment of Management Structures in Support of
Labor-Management Relations and Cooperative Programs Labor-Management Cooperation Efforts
Randy Duke and Jess Christman of the CORE Group
8:55 Cornell University
Lois Gray, Associate Dean of the New York State School of
Industrial and Labor Relations November 28 (Third Day)

9:00 Case Study #1 - Bethlehem Steel Corporation, Beau- 8:30 Case Study #3 - British Shipbuilders
mont Shipyard Donald Macphail, Planning Manager at Govan Shipyard
Barry Long, Assistant General Manager
10:15 Workshops
G.L. "Bud" Rauwerda, Union Employee Involvement Coor-
dinator
1245 Case Study #4 - Puget Sound Naval Shipyard
Ken Smith, Management Employee Involvement Coordinator
Wayne Williams, Special Projects Officer
 INTRODUCTION
Michael Gaffney Good morning. I'm Mike Gaffney from
Cornell University, and it is my pleasure to open this workshop
on Human Resource Innovation in Shipbuilding/Shiprepair. It is
also my privilege to introduce to you our Chairman for this
workshop who is General Manager of Human Resources for the
Marine Construction Group at Bethlehem Steel Corporation. He
is also Chair of the Human Resource Innovation Panel of the
National Shipbuilding Research Program, Mr. Frank Long.
Frank Long Good morning and welcome to the second
national workshop on Human Resource Innovations in Ship-
building and Shiprepair. The first national workshop was
conducted here at M.I.T.A.G.S. in May of 1983, sponsored by
the Education and Training Panel of the Ship Production
Committee of the Society of Naval Architects and Marine Engi-
neers - the National Shipbuilding Research Program. Among
my acquaintances, not very many people are familiar with the
National Shipbuilding Research Program. I suspect that there are
others here who are equally unfamiliar. My presentation will be a
synopsis of what the Shipbuilding Research Program is and how
the subject of "Human Resources" ties in with it. My material
was "stolen" from Bob Schaffran. If it is inaccurate, he has some
responsibility for it, and he is here to correct me.
The National Shipbuilding Research Program is a cooperative
venture of the U.S. Maritime Administration, the U.S. Navy and
the shipbuilding/shiprepair industry. The objective is to improve
the productivity of U S , shipyards. This is accomplished through
the provision of financing and management of technical research
projects. The research projects are funded jointly by MarAd and
the Navy at approximately $4 million per year in recent years.
Industry's contribution is the absorption of indirect labor costs,
including overhead and general and administrative costs. The
National Shipbuilding Research Program provides for industry
participation in the program's technical management through the
Ship Production Committee (SPC) of the Society of Naval Archi-
tects and Marine Engineers. The Ship Production Committee is
composed of senior technical managers from U.S. shipyards that
collaborate with MarAd and the Navy in establishing program
priorities, assigning responsibility for projects, and providing
technical direction. Technical research panels under the Ship
Production Committee are ten in number, each responsible for
providing guidance and direction to projects in a specific area.
Each year the panels make recommendations to the Ship Produc-
tion Committee for future projects. The Ship Production
Committee reviews all panel recommendations, and finalizes
project recommendations to MarAd and the Navy for funding.
Panel #5, Human Resource Innovation, is the newest of the
research panels.
In late September, Bethlehem Steel Corporation received a
contract from MarAd providing funding for research projects in
the field of human resource innovation. The idea of the panel
originated from several sources - the National Research Council,
a blue ribbon panel of the SPC, and SP9 (Education and Training
Panel), which actually examined this field under the rubric "social
technology." Subsequently, although SP9 determined that social
technology was not in its own charter, the panel did recommend
the subject matter as deserving of industry attention.
The Ship Production Committee was thus persuaded to estab-
lish the new panel to conduct research in the area of human
resource innovation. SP9 provided funds for a special human
resource task force to carry the message of this new activity to
industry. The task force consists of Dr. Michael Gaffney of Cornell
University and Frank Long. Michael is SP5's program manager;
that is a paid position from these funds. Mine is an unpaid posi-
tion. By the end of the year Michael and I will have visited on
invitation 15 yards for the purpose of introducing them to human
resource innovations, either in place or being tried in Japanese,
Northern European, U.S. shipyards, and in other U.S. industries.
In late August of this year, SP5 held its first panel meeting - a
total of 18 yards had joined the panel to date. Union representa-
tion from those yards is encouraged and anticipated. Our objective
is to develop, test and diffuse new management practices and
organizational forms which better tap the potential of the ship-
building human resource.
This workshop has many sponsors: The University of Micl.~igan,
Bethlehem Steel Corporation, Cornell University, the Department
of Labor, the Department of the Navy, the Maritime Administra-
tion. However, the workshop itself was produced and directed by
SP5, and principally by SP5's program manager, Dr. Gaffney.
Dr. Gaffney is a graduate of the Merchant Marine Academy and
has a Ph.D. in Anthropology. He's been a deck officer at seii and
on the Great Lakes. He is currently on the faculty of the School of
Industrial and Labor Relations at Cornell University. In addition
to his duties as program manager for SP5 he is also working with
American President Lines and six seafaring unions on an employee
involvement/work redesign effort related to some new vessels
they have acquired. Michael will be our master of ceremonies for
the rest of the program.
Michael Gaffney I asked Frank not to give me any credit
for the design of this workshop until we saw how it was going.
Actually, the design of the two days is a creation of the Human
Resource Innovation Panel (SP5) which Frank has just introduced
to you. I want to point out that there are a number of SP5
members among you, and we have indicated who they are by a
red dot on their name tags. So if you have any questions about
SP5, these individuals can provide the answers.
Last August when the challenge to design this workshop was
laid before SP5, I presented a number of alternatives. I told panel
members that we could bring either a lot of Europeans and
Japanese to tell us how it is done overseas, or we could focus on
U.S. shipyards because there is quite a bit being done by American
yards in this field of human resource innovation. I also gave them
the additional choice of focusing on the employee involvement/
worker participation/industrial democracy aspect of this subject
matter, or on work redesign (small work teams, decentralization).
Further, I asked them if they wanted the workshop to be a lecture
format with information being dispensed to the audience by the
experts, or a workshop format based upon a lot of interaction
among the participants. The answer they gave me to these qlues-
tions was "Yes." So we've tried to combine all these elements in
these two days. The result is a very full schedule. Even with a.11 of
that up-front planning, the fact that we have over 100 participants
representing 27 yards and 17 unions (far more than we antici-
pated) has forced us to improvise somewhat. We had to move
from a more intimate room to this auditorium, but we will resort
to breakout groups on occasion and thereby retain as much
interaction and participation as possible.
I would like to briefly go over the agenda with you. After some
introductory words from our sponsors, we will hear our first US.
case study (Bethlehem Beaumont), then an overseas case study
(Japan), followed by a look at what is going on in Germany, and
an overview of developments throughout Northwest Europe. At
the end of this afternoon, we will break out into small groups to
determine what topics you wish to focus on tomorrow. We didn't
want to design the entire workshop in your absence, but thought
it would be wise to let you have a hand in it as well.
Tomorrow morning we will have another U.S. case study, this
time a naval shipyard (Puget Sound), followed by our second
overseas case study (Govan Shipyard of Glasgow, Scotland). That
afternoon we will have two breakout sessions consisting of a
number of concurrent workshops addressing various topics earlier
identified by you. You will have a chance to review the topic
listing and pick those workshops that most interest you.
I'd like now to introduce to you Howard Bunch. Howard is the
NAVSEA Professor of Ship Production in the Department of
Naval Architecture & Marine Engineering, University of Michi-
gan. He also Chairs the Education and Training Panel of the
National Shipbuilding Research Program. I like to refer to
Howard as the illegitimate father of the Human Resource Innova-
tion Panel (SP5) because it was Howard and Howard's panel that
decided two years ago that it might be useful for the industry to
explore this subject matter of employee involvement and work
redesign. Howard and his panel are responsible for the workshop
and proceedings from a year and a half ago, and also provided
major sponsorship of a series of mini-workshops that were pre-
sented to a number of your yards this past summer and fall, and
also for this workshop.
Howard McRaven Bunch In the few minutes allotted to
me I would like to describe the events leading to this meeting, and
to highlight the role of the Ship Production Committee (and its
Education Panel) in bringing it to come to pass.
About three years ago, the Ship Production Committee asked
its Education Panel to investigate whether the SPC should expand
its activities to include research toward the improvement of the
effectiveness of the human resource component of shipbuilding.
The SPC was aware that most overseas shipyards had different
work organizations than did US. yards, but there was uncertainty
as to how this difference actually impacted on productivity. Until
then, all of the Committee's projects had been directed toward
facilities and process improvements, with the exception of the
Education Panel (SP9) - which had just been created.
The panel undertook the study - indeed it commissioned Dr.
Gaffney to do the work. The conclusion was that there were
human resource areas - other than education - where attention
should be given. The Education Panel evaluated Dr. Gaffney's
study, and after considerable discussion decided the next step
should be a national workshop to accomplish three objectives:
1. Educate the attendees as to the various concepts of human
resource innovation that might be effectively introduced to
shipyard environments - including both individual-oriented
concepts (e.g. behavior modification), and group-oriented
concepts (e.g. quality circles).
2. Determine the extent of shipyard interest in proceeding with
a formal program of human resource innovation research.
3. Should industry reaction be positive, decide on the best way
to proceed.
To make a long story short:
-The workshop was held in May, 1983 - the Proceedings of
the workshop were published, and have been a bestseller.
-The interest in human resource innovation projects was so
strong that the panel decided to continue the initiative.
-The panel funded a program of mini-workshops for interested
yards, and a second national workshop, which is this meeting.
It was hoped that the mini-workshops would also result in
identification of coteries of persons at the various yards who
would provide the basis for the establishment of a new SPC
panel. Indeed this group did materialize and the new panel has
been formed - as many of you know. I would expect that
many of you in this room are members of the new panel.
Bethlehem Steel Corporation is the program sponsor, with Mr.
Frank Long being the panel chairman, and Dr. Mike
Gaffney serving as program manager.
The Education Panel is proud to have been the sponsor (and
protagonist) for establishment of the Human Resource Innovation
Panel, the mini-workshops and symposia leading up to this event,
and to have been the main sponsor for this meeting.
The reason our panel committed about one-quarter of its
research resources over two years (over $loOK) to this single
program was its conviction that the area is one of the major
points for potential improvement in the shipbuilding process. It is
also our conviction that the first step in realizing this potential is
through education at all levels in the shipyard.
On the basis of what I have seen this morning - over 100
attendees representing over 20 yards, and with both labor and
management represented - I am convinced that our enthusiasm
and support was well-founded.
We wish you well during your meeting. And we will see that
the Proceedings are available for your use and circulation among
your colleagues as quickly as possible.
Michael Gaffney Virgil Rinehart is Director, Office of Advanced Ship
Development and Technologv. Virgil's responsibilitiesinclude the National
Shipbuilding Research Program which has been independentlyjudged to
be one of the longest running and most successful examples of govern-
ment/industry cooperation in research and development. It is through
MarAd and Navy cost sharing in the National Shipbuilding Research
Program that has made this workshop possible.
Virgil Rinehart I want to say what a pleasure it is to be here
and to be allowed to participate in this workshop. I say that
humbly because although I think this program has been very
successful, and although I take pride as part of the Maritime
Administration in this program; I really can't claim any part of it
as my doing. I've been a sailor for many years and been in the
MarAd R&D Program for over ten years, but I'm the new boy on
the block as far as this program is concerned. Of course, the
human resource area is the new boy on the block as a part of the
National Shipbuilding Research Program.
We've talked about research and development generally dealing
with something inanimate like hardware and welding develop-
ment, which are some of the biggest programs within the Ship-
building Research Program. These and other process technologies
have attracted a lot of attention. Gradually, though, we recognized
that management and organizations had a great deal to do with
productivity in shipyards. And, as is usually the case, we belatedly
realized that human resources are the heart of productivity in any
industry.
The success of this program has truly been based upon an edgy
but successful cooperation between various shipyards of this
country. We now have cooperation between the Navy and Mari-
time Administration in the funding of this program. We have
cooperation between government and industry which is not ordi-
narily found in this country. Usually we find an adversarial rela-
tionship between government and industry and that may have to
change somewhat. Finally, it is based upon cooperation between
management and labor.
Programs like this are forerunners of a new mood in this
country. I think it's appropriate that this seminar is held at this
marvelous facility, which is really a showplace for human resource
training.
I mentioned earlier that human resources are frequently the last
thing that we consider when attempting to improve productivity.
I'd like to refer to a book that's been getting a lot of attention in
the last year or so -- a book called, In Search of Excellence-
which emphasizes that successful companies pay a lot of attention
to their human resources, not just to the top 5 or 10 percent of
outstanding performers and not just to the 5 percent or less of
those who provide some kind of trouble for the organization, but
to those 90 percent of good, solid, hard-working people, without
whom the company could not function. Without this "coopera-
tion" organizations cannot reach their potential.
Considering all the foregoing, I congratulate all of the partici-
pants here for their enlightened and farsighted attention to the
importance of human resources in shipbuilding productivity. I
wish you all success and hope that the spirit of cooperation
demonstrated here will set an example not only for this industry
but also for all America as it faces the challenges of foreign
competition in the years ahead,
Michael Gaffney About one year ago, the Maritime Administration
consulted with the Department of Labor concerning the formation ofthis
new labor-managementpanel. Since that time, SP5 has received consid-
erable he@from Mr. Stepp and his stafl especially Bill Batt. Oneform of
assistance has taken the form of partial financing of this workshop. I
should add that Mr. Stepp's portfolio at the Department of Labor has
recently been upgraded to bureau status.
John Stepp The Department of Labor is happy to be in a
co-sponsorship role here at this conference with the Maritime
Administration, Navy, ILR School at Cornell, University of
Michigan and Bethlehem Steel Corporation. I'd like to talk about
the Bureau of Labor-Management Relations and Cooperative
Programs. It's a new entity in the Department of Labor. We came
into existence as a Bureau just a few months ago. Our mission is
to sponsor and co-sponsor events such as this. We are interested
in making any contribution that we can to foster a less adversarial,
more positive, more cooperative kind of labor-management
climate. Essentially, our role is as a catalytic agent, sponsoring
and co-sponsoring such events, bringing labor and management
together where they can deal with problems which are of mutual
interest.
We have to date sponsored a number of events that have some
similarity to this, but today is different in one respect -never
have we sponsored a conference or a symposium that has been
industry-specific. This is something we're involved in for the first
time. We're very interested in seeing how this kind of event might
come together-it could conceivably be a prototype that could be
used in any number of other industries where labor and manage-
ment could convene to discuss problems that they may share.
I should also say that in addition to sponsoring conferences,
seminars, symposia and such events, we're trying to distribute as
much information in printed form as we possibly can. Publications
which we have produced to date are designed specifically for
labor and management practitioners.
In closing, I hope that you will find this a profitable gathering,
and I'm sure you will take with you a few new ideas. Again, on
behalf of the Department of Labor, we are pleased to be a
cosponsor of this event.
Michael Gaffney The New York State School of Industrial and Labor
Relations has as it's charge, not only the delivery of resident instrhction
for degree students, but also the provision of education and training
opportunities to practicing union officials and managers in subject weas
germane to labor-management relations. These include traditional lopics
as well as new issues such as employee involvement and work redcvign.
Lois Gray is Associate Dean for Extension at NYSSILR.
Lois Gray On behalf of Cornell, the School of Industrial and
Labor Relations, I want to extend a warm welcome to all of you
who are attending this important workshop. We are pleased to
have the opportunity to participate in organizing and sponsc~ring
this event, which fits so closely to the mission of the ILR Sch,ool.
The ILR School's function is not only to provide resident instruc-
tion, but also extension education to practitioners.
The School was established by the New York state legislature
40 years ago on the basis of extensive hearings as to what contri-
butions the state could make to improving industrial and
labor conditions. Initially, there was thought given to enacting
more laws, but the consensus of the hearings was that what was
needed was not more laws, but more knowledge. This led to the
establishment of the ILR School at Cornell University. Over the
years, the School has extended beyond the borders of New York
State and has worked with other universities, such as the
University of Michigan, in co-sponsoring national conferences. It
has undertaken international outreach as well, bringing studlents
and professors from abroad, and sending our own faculty abroad
to offer technical assistance to other universities interested in
entering this field of human resource management. This past has
led to the School's current interest, which is central to the tht:me
of this conference.
About a year ago, we established a special activity of the
School entitled Programs for Employment and Workplace
Systems. This program offers technical assistance, educatl~on,
research, and evaluation to unions and management which are
engaged in analyzing their own workplace problems and
attempting new solutions.
The history of union-management cooperation in this country,
which has been rocky as you know, demonstrates that it really
can work if several conditions are met:
1. The parties are faced with serious problems they recognize as
threatening to their own survival.
2. They have a genuine commitment to doing something ab'out
these problems.
3. They see the potential for a mutual pay-off, a mutual gain, on
both sides.
There is evidence of a commitment to solving these problems
and there is a potential for mutual payoff. We look forward to the
results of this conference as a step in the right direction.
 Bethlehem Steel Corporation
Beaumont Shipyard
Case Study #1
Barry Long,
Ken Smith,
G.L. "Bud" Rauwerda
Michael Gaffney A team of three will be presenting the Beaumont
Shipyard case study. They are in reverse order of appearance:
"Bud" Rauwerda, a long service welder in the yard shop steward for
the Boilermakers, and current& union coordinatorfor the yard's employee
involvement initiative.
Ken Smith is Bud's management counterpart in employee involvement
coordination. Ken worked for a number ofyears as a pipefiter, and more
recently in Beaumonr's Planning Department.
Barry Long is Assistant General Manager of the yard. He has been a
shipbuilderfor 33 years, first in his native England and then subsequently
in Canada and the United States. Barrv asked me to make it clear to all of
you that he is in on way related to ~ r h n Long,
k also of Bethlehem ~ t e e i
Barry Long Since this is a case study, I want to give you a
little background about the facility that we have at Beaumont,
and then tell you what we have been doing for the last 27 months
in order to give you a chance to see the process we have followed,
and to second-guess us.
The people in Beaumont are the finest people in the world; the
workers are some of the best workers in the world. We have a
long tradition of visitors coming to our shipyard - visitors from
the U S . and other parts of the world - who walk around
commenting on the high proportion of our work force who are
working. Many of you know that doesn't always apply, but we
have a dedicated work force and for many years we have been
internationally competitive.
Unlike a substantial portion of the American shipbuilding
industry, our particular product, which has been mobile offshore
drilling units since the late 1960s, is one that we have been selling
in a world market. We have been competitive without subsidy or
government intervention. This has been possible not because we
have the cheapest labor; in fact, far from it. The rates we have
been paying have tended to be among the highest in the United
States. But we believe we have the smartest people when it comes
to building ships and mobile offshore drilling units.
The shipyard in Beaumont was actually founded in 1917, and
purchased by the Bethlehem Steel Corporation in 1947. During
the Second World War it employed over 10,000 people -
building ships and other vessels for the war effort. After the war,
it continued as a shipyard but tended to build specialty vessels
such as LPG barges and some of the very first offshore production
towers that were used in oil exploration and development in the
Gulf of Mexico. From the late 1960s to the early 1970s, we
ventured into semi-submersibles and, as some of you know, that
was one of the quickest ways devised for a shipyard to lose
money. We were not the exception. At that time we had about
3500 people on the payroll, and after taking a long, careful look
at the facility, we decided that not only were semi-submersibles
not good things to build, but 3500 people were too many for the
facility to operate properly. Since then, we have tried to run a
facility with a payroll of about 2200 people, and we have been
successful in the last 12 or 13 years in building primarily for the
offshore industry.
In Beaumont, Houston, and Southeast Texas, we have an area
which is very dependent on the petrochemical industry in all its
many facets - an area which is very proud of the fact that it was
recession-proof, Whatever else happened through the 1960s and
1970s in the rest of the world, Beaumont, Houston and Southeast
Texas still flourished.
In the spring of 1982 it was still a boom area. By the fall of
1982 it was a disaster. For the first time in history, the real facts of
life came home to Southeast Texas. The local refineries and
petrochemical works, many of them, cut their labor forces by
more than half. We have a prevailing unemployment rate in the
area at the moment of somewhere around 20 percent. We have a
situation where no one has ordered an off-shore drilling unit in
three years and we have no real prospects of anyone ordering
another one for some considerable time into the future. So in
1982 we had to take a very hard, long look at whether we were
going to survive, and how we were going to stay in business.
We were surprised to discover in 1982 that Bethlehem Steel
Company had been involved in employee involvement activities
at the end of the First World War back in 1918 and also during
the Second World War. The things that happened then were
what we might now call quality circles or problem-solving teams.
There were labor-management participation efforts in both the
shipyards and the steel plants of Bethlehem way back, a long time
before anyone really appreciated it. But both times, once the
immediate national emergency had died, the desire for coopera-
tion died with it. During the late 1970s and into the early 1980s,
the corporation took a positive step to encourage labor-manage-
ment participation in various forms in the steel plants. In the
Sparrows Point Shipyard in Baltimore, problem-solving teams
and various other aspects of employee involvement were installed
during 1981-1982.
In August of '82 at Beaumont, a labor contract came up for its
three-year renegotiation which was accomplished without a strike
for one of the very first times in history. As part of the renegotia-
tion we had a memorandum of understanding between manage-
ment and unions whereby it was mutually agreed that at some
suitable time we would get together and investigate the possibility
of, and the form that could be taken by, employee involvement
activities. By December of '82, as I said, the real world had come
home to Southeast Texas. Our hourly-paid work force dropped
to less than 50 people. You can't run an employee involvement
effort with 50 hourly-paid people. W e didn't even try. However,
in the beginning of '83, we did get a major ship conversion
project, which we're still working on, our hourly-paid work force
started to increase and by March developed to several hundred
people. We approached the union business agents and asked if
they would now like to start implementing the memorandum of
understanding, and they indicated at that time they didn't feel
they were quite prepared to do so. In May of '83 we had one of
our representatives visit the previous seminar that was held here
at M.I.T.A.G.S. and we began to get some idea locally of what
could be accomplished by employee involvement efforts.
In June, Bethlehem's Vice-President for Shipbuilding, who is
Chairman of the Shipbuilders Council of America, visited our
shipyard and sat down for supper with business agents of nine
different unions and talked with them about the possibility of
implementing a labor-management participation effort in the
Beaumont yard. In September, he came back again and told them
that management had decided that it was time to start moving.
The response we got from the business agents was that they
thought this was a fine idea. They agreed to work with us and the
initial agreement made in that September was that the shipyard
should investigate and hire an impartial external consultant. Since
the corporation was going to pay for this consultant, the unions
agreed that we should find him and then, of course, present him
to them for their review and agreement.
So in November we took our next fortuitous step. The general
manager of Beaumont Shipyard and I attended a meeting at
Bethlehem where we were brought up to date with the corporate
position regarding labor-management participation. Following
that meeting, we visited the Sparrows Point Shipyard where the
two of us actually attended a problem-solving team in session.
We sat there while the team talked. Like a couple of flies on the
wall, we watched what they did, how they did it and what they
said. The session lasted only an hour, but it was an hour that was
worth an incalculable amount of money because we were able to
see the differences and the similarities between the theory we'd
heard about and the practice that was actually happening in a real
live shipyard. W e were very much impressed. It seemed that the
middle level of supervision and the hourly-paid people were talk-
ing openly and frankly about problems and seeking to solve them
in a very objective and impartial fashion. It did a lot towards
convincing the general manager at Beaumont that this was some-
thing that wasn't just pie-in-the-sky at a university. It was some-
thing that would really work out on the floor in a shipyard. Later
in the same month we had the corporation screen some potential
labor-management participation consultants and submit a list of
three to us for evaluation. W e had these candidates come to the
yard and talked with them about their philosophy. We showed
them the yard and they met a few people so that we could see
them and they could see us.
I'd like to point out some of the more interesting aspects of the
screening process. First of all, we discovered that all three of these
potential consultants were a little bit frightened of shipbuilding,
and their fright came out in the form of questions like: "Do you
really mean it? Are you really going to go through with it?" One
of them was very fond of telling us that he didn't want to get
involved in a "Kamikaze" effort. He was afraid we would start off
with reckless enthusiasm and then the whole thing would explode
and die within six months. None of them was really convinced
that we were for real. Our attitude was that we would only have
one chance to implement something like this in, shall we say, my
lifetime. If we tried now, and failed, especially if we failed through
some visible mistake on the part of management, it could be 10 or
15 years before we could have another trial. So the consultants
were suspicious of us and we were a little cautious about the
consultants. Were they really for real? Were we really for real?
We discovered some interesting things in interviewing these
potential consultants. One was a university group, which shall be
nameless, which came in and made a magnificent presentation.
They were by far the most impressive of the three. They had
ideas, they had schemes, they had ways of approaching the matter.
They apparently had a bottomless pit of graduate students who
could be turned loose on us to do all sorts of wonderful thlngs.
But it became very obvious as we were talking to them that they
were working on a project. These graduate students, many of
them, were going to acquire masters or doctorate degrees from
the work they did in our shipyard. They had this marvelous
scheme which they were going to apply to us. If at the end of two
years, three years, or five years the whole thing had fallen flat on
its face and failed from our point of view, it was obvious that
from their point of view it would still be a success because they
would still have contributed to the sum of ~ndustrialrelati~ons
knowledge and demonstrated that certain techniques did not nork
in a shipyard. As I say, they were the most impressive group and
could well have been the cheapest financially, but we steered well
clear of them. As far as we were concerned success meant the
thing working; success did not mean adding to the total sun1 of
human knowledge. I apologize to the people here representing
their universities, but we did not want to be a guinea pig. 'The
story they used to tell me in England when I was a small child
was that if you hang a guinea pig up by his tail, his eyes fall out,
and we did not want to be the people whose eyes fell out.
The consultant we finally engaged was Dr. Peter Lazes who is
associated with Cornell University. In December we expre~~sed
our interest to Dr. Lazes and he came down and spent some t me
looking closely at us, re-evaluating some of his first impressions,
and meeting individually with representatives of each of our nine
shipyard unions. It was of no value to anybody if we picked the
finest consultant in the world and said to the union, "This is the
man we are using. Take it or leave it." That's a short way to
suicide. We, as well as Dr. Lazes, went to a lot of trouble to make
sure that each of these people met with him, heard him out, and
agreed separately that he was in fact the right person to work with
us on this effort for a period of some years. Each of the nine
unions agreed to accept him as the external consultant.
In January the Cornell team, Dr. Lazes, and several other
people visited the shipyard to interview members of management
and union members, to assess the readiness for a participative
effort in the shipyard. And in February, as an attempt to m;ike
sure that everyone knew what was going on each step of the way,
a letter was sent to every single employee briefly recapping the
history. We explained that we had these people from Cornell here
and that they were going to conduct hour-long individual imer-
views with about 20 percent of our total payroll. This letter was
signed not only by our general manager, but also by the president
of our Metal Trades Council, the business representative from our
Pipefitters local and the representative from our Machinists' local.
(The nine unions are split up into three groups: Pipefitters, Ma~:h-
inists, and the other seven are amalgamated into this Metal Trades
Council. Negotiations are normally handled by the three groups
even though there are nine unions involved.) Cornell University
people then came and conducted interviews with 20 percent of
our labor force.
The interview candidates were more or less selected at random
from the total payroll list; we had representatives interviewed
from all levels in the shipyard, not just the hourly-paid employees.
The survey covered our engineering department, staff suppxt
departments, and upper levels of management. In March of '84
they presented an organizational assessment, which was a report
detailing, summarizing, and analyzing the results of 234 interviews
which they conducted.
Ken Smith will now explain what it was that Cornell University
found through these 234 interv~ews.
Ken Smith The purpose of this assessment, of course, was to
avoid this "Kamikaze" thing that Mr. Long alluded to. We wanted
 to make sure that we conducted an up-front analysis of the existing
conditions in the yard. The purpose of this was to achieve the
proper fit between the problems of the yard and the available
options, to achieve success of the employee involvement effort.
This was not just a readiness assessment; we did thorough research
in all levels of our company from the top to the bottom to identify
the problems, and then select the proper interventions. We also
wanted to determine the readiness for change in the yard, both at
the management level and with the union and the employees. The
last item was to allow face-to-face contact and discussion between
the employees and the consultants.
Mr. Long alluded to some of the means which we used to
conduct the assessment. We randomly selected from payroll
records 152 hourly people, 57 production supervisors, and 25
management people to participate in structured interviews.
Through the interviews we took a look at the big picture including
business, economic, and technology issues, as well as new products
and our bidding process. The question format was reviewed and
approved by union and management prior to use. The key areas
covered in the interviews, particularly with the hourly people,
were cooperation between departments, cooperation within
departments, how people liked their jobs, relationships with
supervision, specific problems that they found in their day-to-day
work including shortage of or availability of tools and materials,
etc., communications up and down the line, and information
sharing.
The major findings that resulted from these interviews were
divided into two broad categories: positive areas and problem
areas. Generally speaking, we found that the employees liked
their work, and were satisfied with the level of challenge that they
found in their day-to-day duties. Pay and benefits were generally
acceptable, particularly among the hourly people, but we had
some problems with benefits with the salary people since we had
just gone through a benefit adjustment at that particular time.
Generally there was good will toward other employees; salaried
and hourly employees liked the people they worked with for the
most part.
The problems that turned up as a result of these interviews
were very interesting. Generally speaking, the employees lacked
feedback about their work. Their comments, particularly among
the hourly people, concerned the fact that they would go on the
job during the day and do what they felt was an acceptable task,
and at the end of the day there was no comment, no feedback
from their supervision. They had no understanding of whether the
work they were doing was appreciated or whether the quality
level was acceptable. They felt that they were just a number, that
they punched in in the morning and punched out at night and no
one seemed to know whether they'd even been there.
The second item of concern among the employees was the
limited sharing of critical information. Information such as major
details of production schedules, and short-term and long-range
planning, does not filter down to the hourly people. People in
engineering and other facets of our business were also not
receiving communications of this type. Because of this, people felt
they lacked opportunities to make constructive suggestions about
their work. Of course, from our analysis, and even prior to
entering this assessment period, we realized that if there were
problems in the yard, the people there would be aware of them
and would ultimately provide the solutions to those problems.
Unfortunately, most of our first line supervision including our
department heads in our production department, don't seem to
feel that way. When a person has a suggestion that might improve
productivity or eliminate a bottleneck situation, usually the
response is, "Oh, we tried that before. You get back on the job."
The fourth problem that came up was the coordination and
interaction between the departments. The hourly people feel that
we have a great deal of interference rather than cooperation
between departments. They have trouble getting lifts when they
need material onboard ship, they have a problem getting material
delivered from the warehousing facilities, and things of this type.
O n the TAKX Program that we are currently involved in, the
employees at the time of these interviews were extremely
concerned about the rework that was taking place. We had a
great number of engineering changes because of our follow-on
yard status and there was some time delay in the yard. The
reasons the rework had to be performed were not relayed to the
employees and they were highly concerned about the fact that
they had to do construction work, then go back and do it again to
avoid interferences. So this was not only a problem of rework but
of communication. The employees were also extremely upset
about the availability of tools and equipment. It seems that they
were just not able to get the message to their first-line supervisors
or their department heads, to provide the proper tooling at the
proper time and place.
Another problem is that people feel they lack opportunities to
grow on the job. This I interpret to mean that there was no
clear path for upward mobility among the hourly people. They
felt that they were locked into their positions, without the means
to attain positions other than supervisory positions. Some people
just do not wish to take the next step along the line and become a
supervisor. They would prefer to get into some other field in the
yard. But they have found that they do not have paths in that
direction. The last item in the problem areas concerned the lack
of training in supervisory techniques and in craft skills such as
blueprint reading, and advanced skill training.
The results of this assessment, four general recommendations,
were presented by our consultants. First, they indicated that we
needed to stabilize employment levels. Because of the nature of
our business, or perhaps as a response to our lack of competitive-
ness in some markets, our business level has not been consistent
lately in terms of construction orders in the yard. This has caused
continuous lay-offs and re-hires. Through improved efficiency
and productivity, and becoming more competitive, we could put
ourselves in a position of having a larger order book and thus,
stabilize our employment level.
The second recommendation involved creation of work
assignments so that employees are responsible for identifiable
tasks. We have a habit in our trades in the yard of giving very
general instructions as to what work has to be accomplished. This
is a cause for re-work in many cases and the employees voiced
their dissatisfaction as a result of that.
The third suggestion was to create opportunities for hourly
employees and managers to resolve daily problems and do more
long-term planning. We have a definite lack of communication
both upward and downward in our yard. As a result, the hourly
people do not become heavily involved in short-term or long-term
planning. These people are the ones who are on the job and they
should have substantial input into the requirements for such
planning. Communication is a large problem in many companies,
in many shipyards, and ours is no exception.
The fourth recommendation was to improve employee access
to information. Finally, it was recommended that we create a
flexible work structure to respond to present economic conditions.
I would prefer to leave that last item to more in-depth discussion
by our consultants at a later time; however, it is representative of
the conditions we have in our yard with nine unions and interfer-
ences and craft overlaps and things of this type.
Barry Long Coincidentally, we were having, for quite
different purposes, an IBM Business Systems Planning Analysis of
the shipyard, which also involved interviewing a substantial
number of people. The constituency for this survey interview was
quite different. The IBM people were more interested in salaried
people and staff people, but the most interesting feature was the
remarkable similarity between two different reports produced by
two organizations for two completely different purposes, inter-
viewing two different groups of people. Many of the conclusions
were the same. The initial feeling I had on reading these two
reports was that if I had enough time in, I should take early
retirement because obviously the yard needed a completely new
management set-up.
The next stage we hit was in April. We had a management
off-site where we had about 20 of our senior managers meet for
three days away from the shipyard. We reviewed the progress
that had been made, went through the organizational assessment
in some considerable detail, and agreed on a plan of action which
we thought should follow.
One of the key issues talked about at this management off-site
related to the fifth recommendation the Cornell team had made.
This was the one that had to do with the flexibility of labor.
When you mention craft overlap in a flexible work force, you
expect union people's hair to stand on end at the very thought
that pipefitters might do welding and carpenters might d o elec-
trical work and this sort of business. Management was just as
upset at the thought of something like this happening. The reason
for this is that the people who perhaps feel most threatened when
you get into employee involvement and some of these other areas
are lower and middle levels of management. Upper management
can take it; they've already got a secure job, so who cares? Union
people, in our case at least, are genuinely trying to improve the
situation in the yard and improve productivity because their jobs
are at stake. The lower and middle levels of management can see
these talks of employee involvement and problem-solving circles
as processes which will render them unnecessary. When everyone
gets together and discusses the job, figures out how to do it, and
then especially if you get some cross-crafting in there, it's the
lower levels of supervision who see themselves out on the street.
We found that in our management off-site, the very suggestion of
any sort of multi-disciplinary work group disturbed management
so much that we had to postpone consideration of such matters
for a little while.
After we had completed this management off-site, we sent
another letter out from our general manager telling all employees
what had happened. The letter reviewed the history of how we
brought Cornell in, had the study, and the management off-site.
We explained that we were going to set up a labor-management
policy and planning committee which would have responsibilities
regarding the initiation of employee involvement activities in the
shipyard.
Soon after this we had a similar off-site workshop for our
union people where business agents and stewards met with the
Cornell team. I think our consultants enjoyed the union workshop
much more than they enjoyed the management counterpart. Must
have been nicer people there. In August, we had the initial meeting
of the Labor-Management Policy and Planning Council where
nine union representatives, one from each union, and nine
members of management met along with a couple of people from
Cornell to plan in detail what we were going to try to do and
when we were going to try to do it. As one result of this, the
union president of the Metal Trades Council and the shipyard
industrial relations manager were selected as co-chairmen of the
Policy and Planning Council. Once again, after this meeting, we
sent a letter out to all our employees co-signed by these co-
chairmen, relating the general policy we intended to follow. We
had decided to set up some employee involvement teams, study
action teams and a steering committee with some emplc~yee
involvement specialists. We set up a schedule around the work-
load of the shipyard as to when it was practical to implement
some of these particular innovations.
We anticipate that this Labor-Management Policy and Planning
Council will meet perhaps two or three times a year for a (;lay
each time and will be the overall controlling body for the total
effort. Below that is a Steering Committee with three union iind
three management members, the union members being one from
the Metal Trades Council, one from the Pipefitters, and one from
the Machinists. The chairman was elected from among their
number and the employee involvement staff are also sitting in on
the Steering Committee meetings in an advisory capacity. The
Steering Committee's responsibility is initially to solicit and select
members for the problem-solving study action teams. Wt:'re
asking for people who are interested in this to volunteer and the
Steering Committee will screen them for labor and for manage-
ment. We're looking for 100 to 120 volunteers from our total
work force of about 1,000.
The Committee will also solicit and screen the problems that
may exist in the yard. We're going to ask our entire work forcc: to
identify problem areas which they think need to be tackled and
the Steering Committee will assign these problems to the various
teams. They will monitor the team activities and then the,y'll
make sure that the recommendations of the teams are imple-
mented. You can see that what's happened at this point is that
management, in the form of the general manager or me, has in
fact handed over the control of this whole employee involvement
effort to the Policy and Planning Council and the Steering
Committee. There is nothing we can do to stop it unless we vr:to
the whole thing and cut off funds, which obviously would get us
into a disaster situation where something like this can not be
repeated for maybe 10-15 years. So the everyday control of tlhis
thing has now gone out of the hands of top management. As far
as the normal routine operation goes, it's now the Steering
Committee which is running the show and reporting back to the
Labor-Management Policy and Planning Council. This, of course,
is an enormous step of faith for management to take. You can
only take this if you really believe this is the right way to go. Now
we are not in a position, as top management, where we can limit
the scope or content of the program; we don't have that right any
more: we handed it over.
Working underneath the Steering Committee are six problern-
solving teams, and we anticipate these will have up to eight
members each, electing a chairman from among their number,
and they will be assigned problems which are departmental or
between two departments. Of the eight members, if it's in tile
production area, we anticipate that maybe six would be hourly-
paid union members and a couple would be supervision. They'll
meet once a week for about two hours. W e also anticipate having
a study action team. The study action team will be the same size
as the other teams although its make-up may be a little more
varied. It will handle bigger problems, those which are of a
yard-wide nature. Some problems are easily definable as belonging
to the welding department or maybe a problem of communicatic~n
might be between carpenters and electricians. There are problems,
however, which are yard-wide, and we anticipate these going lo
the study action team. This study action team has a much wider
range of operation in that it will now meet two hours a week ;is
needed. And if need be, if the problem is of sufficient importance
and magnitude, they will meet on a full-time basis to solve the
problem, monitored of course by the Steering Committee, 21s
stated earlier.
Those are the ground rules within which we were trying to
work as we laid it out in the Labor-Management Policy and
Planning Council and communicated to the shipyard in
September. The employee involvement director, who is one of
the department heads, was appointed to work on a part-time
basis. The two employee involvement specialists, Ken and Bud,
were also appointed to work on a full-time basis. The Steering
Committee was nominated and its make-up agreed to by both
union and management. Both union and management accepted
the employee involvement specialists, and everyone was set to
work together. So in October, we sent out another letter to all our
employees telling them where we were working and the names of
these particular people on the Steering Committee so they could
see just where we were and what was happening. W e considered
this business of constant letters to employees to be very important
because you remember that one of these problems we had was
that people didn't know what was going on. If people don't know
what's going on in an employee involvement effort then you're
obviously failing right from the beginning.
I've gone through fairly quickly what we've actually done in
the last twenty-seven months. That's a long time. It never seemed
to us that we were pushing things and working too fast. We knew
we were going fairly slowly but we tried all along to go slowly
and deliberately and to avoid making mistakes or getting people
upset. Everything you've heard so far, however, about what has
happened has been from management's point of view. I'm sorry,
but that's the side of the desk that I sit behind. One of our
employee involvement specialists, Bud Rauwerda, has been right
in the center of this, however, for quite a while. He can tell you
about how the unions approached this. Can they trust us? Are we
really doing the right thing? How well are they prepared to work
with us?
Bud Rauwerda This is the first time in our local history that
one man has represented all nine unions. It is also the first time in
the sixteen years I've been there that the union and management
have ever attempted to work together. When the unions were first
invited to work with management, we didn't know anything
about the issues - solving work problems, employee involvement
teams - and any time the union doesn't know what the
management wants we always say, "No." They always come
back with a simpler explanation.
The meeting of July '84 turned things around for us. At that
meeting the Cornell team came down and held a two-day work-
shop with all the union stewards and the business agents. We
found out what employee involvement meant and that it didn't
have anything to do with the contract. It was a team effort by
both management and labor working together instead of against
each other. After we explained this to the work force, 95 percent
became interested in the program. The thought of working
together on production problems and using the workers' ideas to
help solve some of the problems had a very positive effect. We
don't want to make the decisions, but we do want to help influ-
ence those who do make the decisions. There are still problems
we must overcome. There is still mistrust between management
and labor. There's a need to see some results from our meetings,
and not just talk. But if management is sincere then the union is
ready to start.
The union is interested in the employee involvement program
because if it works there will be more work for the company.
This means more jobs for us, more jobs for all of the men, more
satisfaction and more money for all of us, I hope.
Barry Long That brings us up to the present. So where do
we plan to go? In December, we will have a meeting of the
Planning Council to see how far we've gone so far. W e will also
start some supervisory orientation sessions to make sure that all
members of lower and middle management are aware of the
implications and effects of what is happening. As I said, these are
the people who feel most threatened. W e also have a rather
unusual situation in our shipyard, whereby our first level of
management, the people we call leadermen, the people who are
actually supervising eight or ten mechanics, are in fact members
of the bargaining unit. This may seem a little strange. Believe me,
its difficult on both sides. They have an allegiance to their union
and an allegiance to management, of which they are part. They
and the levels of supervisors above them feel severely threatened
by this. What's going to happen when my group sits down and
starts discussing how they can get materials better, how they can
do the job more efficiently? What happens if they make a decision
that puts me off to one side? So we are going to have this
orientation session in December where we're going to try to
acquaint these people with what we're trying to do and reassure
them that no one is trying to eliminate them as a level of
management, but that we're simply going to try to re-direct their
activities and use them more efficiently, more profitably, in a
more challenging fashion. We want to give them more oppor-
tunity to make decisions and assume responsibility. W e will also,
of course, be sending out some more of our letters and in
December we're going to start soliciting volunteers for a core
group of members of the teams. As I said earlier, we're anticipating
obtaining and training a core of 100-120 people, and then as
teams are needed in various production departments or various
areas of the yard, the Steering Committee will draw suitable
people from this already trained group. In other words, we will
not be actually training six or eight people here, six or eight
people there, six or eight people somewhere else and keeping
them as a fixed team. Our actual teams will be fairly flexible in
their make up and in their disposition, but they will all be drawn
from this previously trained body of people. We hope to actually
accomplish this training in January of '85.
In February of '85, our Steering Committee should have
received problems and prioritized them; and we hope to proceed
with installing our initial six problem-solving teams and our study
action team. In April of '85, we're going to have another
management off-site to review where we're going and in May-
October we're going to be monitoring and evaluating what's
happening, where we are going, and how we are getting there.
We'll also be looking for ways maybe to improve the methods
and techniques that we've been following so far, after seeing
what's actually happening in the various areas. This is a continuing
program, of course, and we are certainly not going to stop in
October of 1985. We consider this to be the beginning of a
program which will continue for a good many years.
Let us be brutally frank. The reason we are investing a lot of
money, effort and talent in this scheme is that we hope to work
more efficiently and work smarter. If this is just going to increase
our costs, it's a waste of time. The bottom line is that we want to
have a happier and more contented work force but we also have
to have a more efficient work force; if we don't, we'll very soon
find that we have no work force at all.
Over the longer term, we hope to investigate our ability to
extend team training to include all shipyard employees. Obviously
this is a big and expensive step to give everybody an opportunity,
not just some, to sit in on these teams. We will also be looking, in
the longer term, into the utility of multi-craft teams. We think
there probably is a value, once we've learned how to use these
initial teams, in going to teams where the crafts are deliberately
mixed-where a team by design has representatives of two, three,
four or five different shipyard crafts, and are turned loose on
some problems. Maybe we're going to get quite different results
from a team like that than we do from a team which is composed
almost entirely of members of one craft. And again in the longer
term (this may well be several years down the line), we're looking
at perhaps extending the single-craft to a self-governing work
group concept where we can actually have a group of people on
the job who will make their own decisions regarding planning,
scheduling, work assignment, obtaining material, and generally
running the job without so much intervention from management
as now. When you get down to that fifth bullet, the self-governing
work group concept, this is where the middle levels of supervision
start running around in panic. Depending on the experience
gained, we might subsequently go to multi-craft self-governing
work groups, which is a very interesting concept. I think we're
going to have some people talking to us later at this conference
concerning this concept.
We've gone through this process fairly slowly. We haven't
rushed. We've tried to ensure that if this is the one shot we're
going to get, we're going to make sure it's a good one. W e have,
however, learned some things on the way and there are four
things in particular that I'd like to highlight before we finish. The
first lesson is: don't forget that you have people in engineering,
staff, and support jobs who need involvement too. W e found that
it is very easy to gear this whole effort towards the hourly-paid
bargaining unit employee in production, and forget that in our
shipyard, for example, we have about 75 people in an engineering
department. We have accounting, estimating, purchasing, mar-
keting, and the various other staff and support departments. These
people are just as important as the production people outside in
the shipyard. We can't have a happy, efficient, smoothly operating
production side and chaos and confusion in engineering and some
of these other areas. These people need to get involved as well. If
this is employee involvement, they are employees and they need
to be given just as good a share of the pie as everyone else gets.
Another thing that we touched upon is this business of looking
out for the interest of lower and middle supervision because no
one else is going to. When no one tells them quite enough about
what's going on, middle management can feel very badly threat-
ened. This creates the danger that they will pay only lip service to
the whole concept. The boss says, "Do it." "Yes sir, I will do it."
But all the time you know that their inner feeling is fear. Once
you get to that stage, you are dead.
Lesson number three is this matter of communication -
communication up, down, sideways. Make sure that as you're
planning something like this, everyone knows what's going on.
Don't spring surprises on people. We get accustomed very often
in our management approach to making decisions and then simply
telling people. Here we have to tell them a lot earlier and maybe
get them involved in the decision-making process. The union also
gets very accustomed to taking a stand and holding fast to it. They
have to get accustomed to becoming more flexible and talking to
management at an earlier stage than they otherwise would.
Lastly, let me refer to the Olympic motto: Civius, Altiits,
Fortius. In the Olympics that means faster, higher, stronger. Elut
when you're looking at something like this, you really want to
cross out the first part and write "slower." One of the easiest
things to do is to go too quickly. We've taken 27 months to get
where we are, and perhaps we could have cut that time, but not
by very much. If you rush it you may well be heading for trouble.
The higher bit - well once again, don't aim too high to stitrt
with. W e believe that you should crawl before you try walking,
walk before you try running. It's very easy to hear of what's going
on in other places in other parts of the world and try and impie-
ment that in our shipyard in six months time. That's too fast, and
apart from being too fast you're probably aiming too high. There's
a slow, deliberate education process that has to go on for every-
body. Lastly, the Fortius bit -the stronger. Yes, this will not
work unless you have a lot of muscle behind it, and by that I
mean you have to have the full, genuine commitment of your
management and your union business agents. I pointed out that
management in our yard has already had to take a step of faith
and turn things over to other people to run. If we try running it
ourselves, it's not going to get anywhere. We have to trust them.
Both the management of the shipyard and the management of the
union have to believe that we have a lot of intelligent people out
there who are really going to do the best they possibly can. PJe
have to support them to every degree possible.
One of the things that impressed us at the Sparrows Point
Shipyard, when we visited the meeting they had there, was that
the general manager of the shipyard attends every single problern-
solving team meeting that's held. He just comes in through tile
door and sits there. Maybe he's there for the whole session or
maybe for just a couple of minutes, but he's there and everybody
knows that he's interested. You can't go into this with mental
reservations, saying, "Well, we'll do it as long as," or "We'll do it
until." You really have to commit to it and go for it wholeheart-
edly, support it wholeheartedly, and make sure everyone else
does. You need as much strength and muscle behind this as
possible; otherwise, you're going to fail. We're only beginners but
we can tell this much, that without commitment you will fail.
 Technological Changes and Worker Participation in the
Japanese Shipbuilding Industry
Case Study #2
Hideaki Okamoto
Michael Gaffney Hideaki Okamoto is a Professor of Management at
Hosei University in Tokyo, and currently occupies the position of
Chairman of the Department of Business and Management. Professor
Okamoto has conducted considerable research on the impact of
technological change on labor-management relations in the Japanese
shipbuilding and steel industries. His most recent studies havefocused on
the implementationof industrialpolicy designed to assist in the adjustment
of employment levels to decreasing scale of operations in these industries.
As an academician, he has served on many research institutes and
committees in Japan (Ohara Institute of Social Research, Japan Industrial
Training Association, Japan Institute of Scientists and Engineers, and
Japan Institute of Labour). He also keeps in close contact with
developments within his field overseas. He has been a visiting fellow at
the London School of Economics, and at the Harvard Business School.
I should add, that Professor Okamoto's qualifications are not only
academic; he has also worked as an hourly worker in steel plants in the
United States and in Europe.
Introduction
The shipbuilding industry in Japan today is, as in many other
countries, one of the ailing industries. It is publicly recognized as a
"structurally depressed" industry. Recently, production capacity
was cut radically, but it is still an overcapacitized industry relative
to the prospective demands. The newly industrializing countries,
the NICs, are coming up with highly efficient procedures.
Competition both inside and outside of Japan is fierce. The indus-
try has lost the prestige it had enjoyed for a long time in both
labor and capital markets.
Yet, for overseas shipbuilders, the Japanese firms in the industry
are likely to be for some time among the toughest competitors.
The international economic relations of the industry appear to be
destined to go through a phase of cooperation mixed with compe-
tition among producers. Given this, people need to share more
information with each other, with much more objectivity than in
the past, in order to act in knowledge. Nonetheless, there seems to
have been little effort to do international comparisons for the
industry.
A systematic attempt to analyze the causes of the comparatively
high productivity of major yards in the shipbuilding industry
would, I hypothesize, highlight the significance of socio-technical
systems, rather than technical complexes. In respect to the latter,
there are many yards overseas which are very similar to, or more
favorably endowed than, the Japanese yards. If one looks to the
past, it seems rather clear that it was not the level of major
technology that mattered, per se, but the process and outcome of
the technological changes, and the latter are the functions of the
socio-technical system.
One way of looking at features of socio-technical systems is to
focus on the system of workers' participation and the factors
influencing the system. In this regard, the extent of workers'
participation at the individual level is measured by the ratios of
suggestions. Involvement in quality circle activities has been to
date rather well known overseas. Since this fact is indisputable, I
would like to offer reasons as to why this has been so, in hope of
exposing some of the significant features of the socio-economic
system. Toward the end of these remarks, I hope also to identify
some major strains within the system.
Employee suggestions and some general back-
ground factors
Contrary to the public image, the major firms in Japanese
shipbuilding are rather well-known among experts of personnel
and engineering fields for the comparatively higher ratios of
employee suggestions for method improvement. At major yards,
70-80% of the regular workers make suggestions through the
suggestion system in a year. The take-up ratios have been generally
high. Shipbuilding has been one of the "model" industries for the
Japan Industrial and Vocational Training Association in its
endeavor to promote suggestion systems in industry.
The shipbuilding industry has also been one of the "model"
industries for the Japan Union of Scientists and Engineers (JUSE)
in its campaign for quality circle activities. Its registered quality
circles are operative at one-third of all the establishments with
more than 100 regular employees. The ratio is high enough to
attain the top position in the extent of its spread with such
industries as electronics, automobiles and steel.
The ratios of absenteeism and turnover of regular workers in
this industry have been, in normal years, saliently lower than in
other major industries. These are only two of the several indicators
of the comparatively higher commitment of workers to their
work.
Some general background factors help explain such pheno-
mena. First is that the major firms in shipbuilding have been
highly prestigious in both labor and capital markets and have
attracted a high quality of manpower on various levels until
recently. This industry was, in pre-war years, one of the industries
given priority in Japan, which has been a resource-poor country
and, thus an international marketing nation. The industry was, in
pre-war Japan, destined to be a major breeding base for other
engineering industries.
Second is that the major shipbuilding firms have been more
technologically innovative. Shipbuilding was one of the very few
industries with which Japan could compete in the pre-war years
in the field of engineering. In the 1960s Japan became a
technological leader of the world. This was in no small measure
due to the fact that Japanese shipbuilding has been intensely
competitive. Thus, even today, there are more than 40 firms with
the annual production capacity of more than 5000 CTRT
aggressively competing with each other. The innovation of one is
rapidly followed by others.
Third is the legacy at major firms of personnel philosophies
that emphasize employee participation at various levels. The
industry had a major confrontation in industrial relations back in
the 1920s, after the mass layoffs that occurred following World
War I. In 1918, the industry had 95,000 workers, but by 1925
the number of workers was cut to 25,000; a drastic reduction, to
say the least, took place. A series of disputes occurred and second waves tended to be the dilution of skills, but that was
eventually there was a great strike at a major center in Kobe. This counteracted with the multi-skill targeting in job design. And this
was echoed by almost all the workers in the industry. The major seems to have prepared the industry for the third wave in terms of
firms were crippled by the event, nearly to the point of extinction, adaptability to change.
and subsequently turned to look for the cooperation of workers More specifically, the division of labor in the shipbuilding
and their organizationsby introducing or improving the employee industry has gone through changes that may be seen in the follow-
suggestion system and the joint consultative committees. ing diagram.
Fourth is the legacy of closer coordination of decisions at
various levels. Prior to 1920, there had been a tendency by top FIGURE 1
management to get involved in investment decisions. The
engineers make the technological decisions, each without close The Changes of Division of Labor
coordination, particularly on manpower and employment
questions. Subsequently, the top board included officers in charge and the System of Hull Construction
of personnel relations and an arrangement was made to have the
Batch-on-Berth Block Assembly Flexible Mfg.
voice of the joint consultative committee on production and
employment relations.
Plant System System System -
Fifth is the more direct involvement of the firm in the (classical) (modern)
production process and employment relations. Until the end of
Fabrication
World War I, labor mobility was very high. The management of (shipwright) Mold Lofting Mold Lofting
the production process largely depended on master contractors. Marking Marking
Subsequently,the major yards reorganized the production process Marking
from "functional control" to what may be called "section control,"
the workshop having been organized by sectional units along (mechanics) Mechanics Mechanics
with the production process. The firms began to engage in the Shearing Shearing
Monopol
training of core-workers and supervisors with more versatile skills
to become the key men in the sections. Along with those, in order (smith) Forging Forging
to secure the long-term commitment of the core-skilled workers Bending Bending Bending
thus trained, the category of quasi-white collar status was intro- ----- ------------ Pressing
duced to the production workers, as well as "permanent
' Small unit
employment" status, the length of service graded wage scales and
fringe benefits. Subsequently, this category was extended not only
Hull
Construction (shipwright) setting
:
I
assembling
Welding
Small unit
assembling
to those who are trained by the corporate apprenticeship schools ---------
but also to others. The trade union in the post-war years played a Medium unit
significant role in extending the category to cover larger portions (Setter) assembling
of workers. A majority of workers at major yards are thus today (Rivetter) Welding
Large unit Large unit
the regular workers falling into this category. assembling assembling
Welding On-the-berth
Multi-skilled targeting in job design On-the-berth assembling
assembling
The shipbuilding industry has been one of the skill-intensive Welding
industries. This seems to be a factor in the comparatively lower
(shipwright) Woodworking Woodworliing
turnover rate of regular workers among manufacturing industries.
Woodworking Measuring
This factor may also account for the relatively high records of this
industry in respect to employee suggestions and quality circle Driller Driller
activities. It must be mentioned, however, that this has not been Rivetter Rivetter
due to the technological conditions alone. The technological Chalker Chalker Fitter
conditions of this industry tended to accompany a dilution of Planer Planer
skills until a decade ago, if the job category is held constant. Yet
this industry continued to serve in the Japanese labor market as a There were pressures for the greater subdivision of work in the
reservoir of skilled workers for small engineering shops and also first major wave and the early phase of the second major wave. A
for the construction industry. In the judgement of the present comprehensive survey on the impacts of technological change!; in
speaker, this is largely due to the multi-skill targeting in job design the shipbuilding industry done by the Institute of Social Sciences,
in the past of major yards, sub-contractors included. An explana- Tokyo University, characterized the changes in the late 1950s and
tion may be in order. early 1960s with the catch phrase, "From the trades to the job."
The major post-war waves of technological changes in this It described the tendency towards dilution of skills in a number of
industry may be put into three classifications. One of these trades. Also, a survey by the Ministry of Labor on skill require-
involved the major shift of hull construction to the block assembly ments in the industry done in the mid-1960s pointed out that such
system with wide application of welding operations from the dilution had been the trend in this industry during the early half of
"batch-on-berth" system with its heavy reliance on the riveting the 1960s.
operations. The second of these is the greater use of computeriz- While the main parts of the findings of those researchers are
ation in machines and control of material handling and processes. correct, it should also be pointed out that there were in those
Third is the increased use of micro-technologies,with the prospect days, that is, the later 1950s and early 1960s, at the same tirne,
of a major shift of the llull construction method into what may be some rather salient moves in the industry toward multi-sikill
termed the flex system, which would enable a yard to produce targeting in work design. For example, the mold lofting workers
various ships simultaneously. The effect on labor of the first and were, under the newer system, i.e., the block assembly system,
expected to be capable of doing all other jobs involved in the
construction process at least at the level of satisfactory
performance. Also, the assembly workers in the respective units
were expected to be capable of doing at least the pre-set welding.
The main parts of the welding operations were, of course, the job
welders. The welders, who are located at both of the on-process
workshops and at the separate workshops, were expected to have
related knowledge and skills to the extent that at least five years
or so of experience was seen as required to be capable of doing
the job on one's own, and at least 15 years of experience for the
ganger in the work team who is under the working charge hand.
Yet, there were important elements of truth in the reports of
the surveys of Tokyo University and the Ministry of Labor. Not
all the jobs were expected to require that much scope and depth.
There has been a measure of deskilling for jobs like marking,
shearing, bending, drilling, planning and chalking. The riveting
workers were re-trained either to the key jobs or to various
semi-skilled jobs in shipbuilding or engineering.
The technological changes of the first and the early phase of the
second major waves tended to go with greater subdivision and
standardization of work. This might have had some relationship
to the fact that during the later 1950s and early 1960s there was a
large-scale labor migration from rural areas. Shipbuilding de-
pended largely on the supply of manpower from labor migration.
In the later 1960s, the strains within the workshops became
apparent in this and in other manufacturing industries. The labor
turnover and accident rates began to increase. Attitude surveys
began to show signs of alienation particularly among young
workers. The shipbuilding industry began to suffer from a labor
shortage, caused in part by changes in the labor market, the
demographic composition of the labor force, and production
technologies.
Coupled with the acute labor shortage were rapidly rising wage
rates. The wage differentials between the regular workers of major
firms and the workers in the sub-contracting firms became even
or slightly reversed to favor the latter, although the differentials of
fringe benefits continued to be rather substantial. There was a
marked increase of urban second-generation workers. Workers
with 12 years of education increased markedly, while workers
who were recruited in large numbers in the 1950s began to
foreshadow the problems of aging.
The second wave of technological changes involved a greater
computerization of work processes. Mold lofting was disappearing
from the production site, and marking was substantially auto-
mated. In the assembly process, conveyors were introduced.
Outfitting began to show features of assembly work with compu-
terized storage control. Welding work changed in its methods
with the appearance of the newer, more automated types of
welding machines.
Around the mid-1960s, major yards began to campaign for
multi-skilled targeting in job design and to strengthen education
and training activities to meet the problems of skill dilution and
the foreshadowed aging. As for multi-skilled targeting, some yards
made long range plans. An example of this may be seen in Table
1.

TABLE 1

Multi-Skill Targeting-
Present Status and the Target After 5 Years

Targeted Present New Arrangements Comopos~tlonof Funct~ons

New Job Job
Pro- Work- Pro- Present After 5 yrs
cess place ducts A B C A B C

A Mark~ng 0 0 0 90%10% 50% 50%

Marklng B Gas Shear~ng 100% 509 50%

A Assembl~ng 0 0 0 907, 10% 50% 509

Assembl~ng B Weldlng 5% 958 50% 50%

A Presslng 90% 10% 60% 20% 2070

Bend~ng B Forglng (X) 0 0 5% 90% 5% 20% 60% 20%
C Forging (Y) 5% 5% 907, 20% 20% 6070

As for the aging, the principle of job design for age groups were specified
at some yards, as in Table 2.
 TABLE 2
The Principle of Job Design For Age Groups
Age Range Principle of
Job Assignment
19-24 1. Physically demanding
type of work
2. Basics for future
25-44 1. Physically demanding
2. Skilled work
1. Not physically
demanding
2. Skilled work
3. Job requiring
45-58 experiences
4. Jobs that can be
performed by all
age groups
This type of tabulation is rather rare, but it is indicative of the
work groups in many yards and in fact in many industries in
Japan. The table classifies work functions into age-based cat-
egories by designating the primary tasks done by each age cohort
into three phases: youth, middle age, old age. However, a young
person may be doing middle-aged work, or a middle-aged worker
may be doing old-aged work in the course of the learning expe-
rience or as dictated by convenience. There is an implicit expecta-
tion that everyone will sooner or later move up the ladder to
skilled work positions or into the jobs requiring experience.
Workshop groups are generally keen to have newer members
recruited with latent ability to move up the ladder. Unskilled
work, like sweeping or cleaning the ditch, is shared by all age
groups. At every age group, to the extent possible, related work
experiences are encouraged, through job rotation, transfer, or
temporary assistance to neighboring work. There are subtle selec-
tions of future leaders; some are encouraged to move up quicker
than others, although only gradually. It is important to note that
this age-job status arrangement has been a long-standing tradition
of the Japanese workshop groups. It has often been a basis for the
multi-skill targeting on occasions of major technological changes.
If skill dilution occurs, the work group often obtains newer func-
tions to re-create the age-job status arrangement within. Multi-skill
targeting in the later 1960s may thus be seen as but one manifes-
tation of this tradition.
Career development orientation has been a conspicuous feature
of the traditional Japanese workshop groups. The medieval artisan
and other social groups had a work group system known as the
Kumi, similar to a lodge or trade club. Compared with the trade
group unit under the western European guild system, the Kumi
was less restrictive of competition within and among the group.
However, the Kumi had a rather radical egalitarian philosophy of
education and training, a sort of neoconfucianism in that it
assumed equality of genetic ability of its members and stressed the
importance of the general basics: respect for the aged, and organi-
zational skills.
Type of Category
Assembling Welding
Loading (including Downward
marking for Horizontal
preparation) Upward
Setting High Pressure
Fixing (upward) Thin Materials
Fixing (horiz.) Tightly to be
Fixing (downward) welded portion
Planering
(finishing) Downward welding
Planering
(rough)
Planering
(forging)
Gas Shearing
On-the-job training and group working
The fact that the shipbuilding industry has been generally one
of the more training-conscious industries seems to be an important
factor for the relatively higher commitment of workers to their
work. At most major yards, the position of a senior manage, in
charge of education and training, who reports directly to the
works manager, has been operative since around the 1920s. He
has been responsible for the corporate apprentice engineering
school, supervisory development, education and training for all
the employees including middle management, and also for educa-
tion and training services for related firms and subcontractors.
At the plant level there are several positions with education
and training responsibilities. There are the "work site engineers"
including the staffs of production control, quality control,
maintenance, scheduling and process control. They are usually a
mixed group of higher education graduates and corporate
apprentice/engineering school graduates. The other significant
groups are administrative staffs including personnel staff.
At the workshop level, education and training responsibility is
formally designated to the foreman and working charge hand;
informally, the ganger in the work team has the responsibility. A
foreman's unit normally consists of two to five units of working
charge hands which is the unit of a crew of the same job cluster,
as for example the crew of assemblers or the crew of welders in
the case of the small unit assembling workshop.
The foremen in the shipbuilding industry have much stronger
authority in production management than in other industries A
significant portion of them, though still a minority, are graduates
of the corporate apprentice/engineering school. However, they
are not out in a special category as skilled workers after gradna-
tion. They start their careers on equal status with the non-
apprenticed recruitees. It may be noted here that the graduate
engineers in Japan also start near the bottom with white-collar
workers who, in turn, are not separately treated from the produc-
tion workers in terms of the system of status and rewards. So, the
position of foreman is attained only after long years of experience.
It may be said that major firms invested a large sum of money for
the development of this "keyman of the industry."
The working charge hand is the crew leader, but he is expected
to perform the foreman's role as far as day-to-day affairs are
concerned upon request of the foreman. Often a charge hand is
expected to perform other kinds of work not only within his
foreman's unit but also outside of it. They are expected to go
through pre-charge hand courses and some of them go through
the pre-foreman courses. The charge hand is most typically recru-
ited from the ganger in the work team. There are informally
several types of gangers in the work team and they may be
broadly classified into two major categories: the group leader
ganger and single-master ganger. The group leader ganger coaches
the other workers in a small group and the single-master ganger
does work on his own rather independently. There is generally
the expectation that most workers will eventually reach the status
of ganger, group leader, or single master, some sooner than others.
Many of the group leaders are expected to be capable of acting as
the deputy charge hand in day-to-day affairs. They are expected
to coordinate the work with other gangers and supervise their
own group members. Not infrequently, there are in the yard the
pre-ganger courses. The ganger is an informal, historically pres-
cribed position within the work group. It may be appropriate to
say that in most of the crews, it is the position to be arrived at
after at least ten years of experience. It may not be too much
exaggeration to say that there is, in the Japanese workshop, the
tradition of ten years' informal apprenticeship.
The so-called Japanese style of on-the-job training takes place
in the organizational settings outlined above. There are thus formal
and informal arrangements for the training of workers. The basic
components of the system are outlined below:
1. There is corporate basidengineering school to develop core
workers within the workshop.
2. There is initial job training at the plant level (after finishing
introductory courses at the work level) which is conducted
by engineers and foremen.
3. There is often "brother" coaching for a year or so, which is
the coaching of senior workers.
4. There is periodic performance appraisal and assessment of
job capabilities. There is also periodic self-reporting about
personal goals, expectations, and assessment of the program.
5. There is often multi-skill targeting designed for individuals,
formulated by foremen through consultation processes.
6. There are subsidies for the preparatory courses to procure
public and intra-firm skill certificates, and also for taking
correspondence courses.
7. There are often study circles to level out technical knowledge
and skill through cross-fertilization, of the opportunity
provided by (6.) above and for other concerns.
8. There is often a set of technical study manuals for operatives
prepared for the work site engineers who at times conduct
seminars according to the plan prepared by the foreman.
9. Not infrequently, one or two persons from the workshop
attend the courses at the training center, on behalf of the
workshop, to accumulate the knowledge and skills within the
workshop.
10. The training center usually has a system of career develop-
ment, consisting of the initial basic up-grading, retraining,
ability re-development and pre-ganger, pre-charge hand, pre-
foreman and pre-engineer courses.
11. There is the practice of transfer and job rotation for the
purpose of education and training. There is also the practice
of giving helping hands to different workshops depending on
the work load, which is an important occasion for multi-
skilling.
12. There is a particular form of group working organized
without the involvement of supervisors for the purpose of
cross-fertilization (quality circles are an example).
It must be mentioned that although the said characteristics of
on-the-job training and other training arrangements are rather
common among larger firms and perhaps even among smaller
firms, there are considerable differences in terms of the extent, the
depth and the viability of the system of human resource devel-
opment. It may be appropriate to say that the shipbuilding indus-
try has been one of the more education- and training-conscious
industries. During recession periods at major yards, the education
and training activities tended to be strengthened rather than with-
drawn. This has been, in my judgement, probably due in part to
the existence of comparatively stronger trade union organization
at the work or plant level with long-standing history and
traditions.
Collective bargaining and consultative
committees: A case
In all likelihood, the critical commentators of even the most
radical ideological stance in Japan would admit that there has
been historically comparatively stronger trade union organizations
at the works or plant level in the shipbuilding industry. Labor-
management relations are in recent years cooperative, but this
does not mean there have not been disputes or confrontation. In
the 1950s and 1960s, stoppages of work often took place over the
issues of rationalization, redundancy and transfers. In particular,
in the 1960s, the strikes for wage increases during the spring wage
offensives were remarkable in terms of frequency. Industry has
been the leader, together with the steel workers, in the spring
wage offensive and while in most cases steel workers have
succumbed to the employers' "single shot reply," the shipbuilding
workers' unions have often resorted to work stoppages in order to
extract a favorable offer from employers. There was even a united
general strike in 1966 involving the joint actions of the two major
rival unions in the industry.
Until the early 1970s there was comparatively more unrest in
this industry, as is clear from the records. The shipbuilding
workers' strikes, like those in other Japanese industries were typi-
fied by the repetition of 24-hour or 72-hour stoppages of work.
They also carried out a ban of overtime, and partial or token
strikes in which they withdrew labor for some hours during a
working day or for some processes of production. These industrial
actions were carried out in disciplined ways and there were no
instances of wild-cat strikes. Almost all these strikes were carried
out with the complete participation of the entire workforce or at
least by all production workers. Upon reaching agreement, the
employees would resume their cooperation in production, and
they very willingly accepted overtime work in order to make up
for the lost time in the delivery period or for the wages lost by the
strike.
Several factors have.combined to bring about the existence of
the comparatively strong trade union organization at the yard
level. One of these is the historical development of labor union
leadership at the yard level. There was a very active union
movement in pre-war years, as was mentioned earlier. The main
current of the movement was divided into four sectors: 1) the
ideologically moderate group represented by the Japan General
Federation of Labor (Sotomei); 2) the National Socialist or
patriotic trade unions; 3) the Naval Arsenal Workers' Federation;
and 4) the ideologically left-wing factions. After the war, leaders
of l), 2), and 3) joined the ideologically moderate Japan Federa-
tion of Trade Unions (Sodomei) and exercised considerable
influence in reorganizing the unions, culminating in the formation
of Zosensoren (General Federation of Shipbuilding Workers'
Unions). But after many years, leftist ideologies were also echoed
by younger generations and they assumed control of the union at
many yards and succeeded in forming a rival national federation,
Zenzonsenkikai (All-Japan Shipbuilding and Machine Workers'
Union). This rivalry led to ideological antagonisms in leadership
at the yard level and factional struggles within corporate-wide
unions. In the early 1960s, new forces within the labor unions
began to emerge, newer generations with higher levels of educa-
tion, who are more pragmatic and well-versed with statistics, etc.,
and they began to lead the spring wage offensive.
Perhaps no one would contest that the post-war trade union
movement in Japan contributed much to the employment security
of workers. Several times there were incidents of mass layoffs.
Generally, the unions did not allow "layoffs by nomination." The
"voluntary leave" system with the negotiated lump sum of sizeable
redundancy pay was allowed, but even this was usually on the
condition that top management take responsibility for their part
(meaning that the corporate president or his equivalent should
resign and go away). The unions could secure, in the 1960s and
until the recent major depression in the 1970s, one of the highest
wage levels among the Japanese industries for their members.
The contribution to the aspects of working conditions made by
the unions are well documented in the report on the quality of
working life in shipbuilding made by a committee of the Japan
Institute of Labor, in English, and need not be detailed here.
Since workers' participation through collective bargaining and
joint consultative committees is highly significant, in my judge-
ment, to the quality of working life and the viability of employee
participation at the individual level, a description of those at a
major firm may be in order. It must be stressed that collective
industrial relations tend to be, in Japan's context, the important
condition for the relative viability of quality circle activities.
The system of collective bargaining at Firm A, which is typical
of major firms in the Japanese shipbuilding industry, consists of
four components: 1) collective bargaining; 2) a joint management
consultative committee; 3) a joint production consult~,tive
committee; and 4) a joint employment relations consultartive
committee, as shown in Figure 2.
Collective bargaining at the corporate level deals with issues
such as basic wage scales, general wage increases, hours of work,
the fringe benefits of retirement, paid holidays, sick pay and
accident compensation, personnel problems such as recruitment,
promotion and demotion, transfers, industrial safety, grievarlces
and agreements on trade union activities. Regarding basic issues
such as wages, hours and fringe benefits, the union bargains a1 the
corporate level, that is through the national union. Negotiations at
the yard level handle specific issues arising within the yarcl. A
relatively high portion of collective efficiency pay at the yard
level and the relative rapidity of technological changes have made
the collective bargaining at the yard level of considerable signifi-
cance. Collective bargaining at the two levels is conducted annu-
ally. The collective bargaining process is defined by the contract
as the "process leading to reconciliation and adjustments over
issues in which the interests of union and management ari:, in
conflict or confrontative."
Of great importance in the shipbuilding industry are the joint
consultative committees on management at the corporation level,
and on production at the yard. The union acts in joint consultation
as the representative of employees. Items that may bear on
working conditions and are originally discussed in consultation
may, if no satisfactory agreement can be reached, be removed
from consultation and made subject to collective bargaining. 1t1:ms
that are considered general managerial policies, such as the
planning of production, the employment plan, the rationaliza~ion
of work and efficiency of workshop organization, are submitted
to joint consultation for the employer's explanation and the
union's argument and proposals.
Items in the category of general management policies are speci-
fied in the labor contract as consisting of facility and equipment
plans, order receiving plans, production plans, material procnre-
ment plans, financial plans, corporate financial records and the
balances. There are also other items specified that are related to
technological changes, including items related to organizalion
plans. They are specified by the labor contract to include the
plans for establishment or abolition of division, yard, pl,~nt,

FIGURE 2 Industrial Relations at Firm A

System of Collective
- - - - Company A Bargaining Union A - - - -I
I
I Board 1. Collective Bargaining
I
I Industrial Relations 2. Joint Management
I
Consultative Committe
I Division Director
I 3. Joint Employee I
I Division Manager I
Relations Consultative
WArk Yard Superintendent Committee
I
Union
Yard Industrial Rels. Rules
I I
I
I
Plant Manager 4. Joint Production
I Section Manager Consultative Committe
I
I Foreman
I
I Working charge hand
I
section, related firms, etc. By practice, the issues on manning may
be subjected to collective bargaining, if consensus is not reached
through consultation. The management consultative committee
meets four times a year in January, April, June and November.
On the joint management consultative committee, the company
is represented by the president, division directors and other senior
executives and is limited to 34 persons. The union is represented
by its president, central executive member and the joint manage-
ment consultative committee members at yards, the number not
exceeding 34 persons. Each party is responsible for providing one
secretary for recording the discussion. The union annually
conducts seminars and study sessions for joint management
consultative committee members, usually in the autumn. They, in
turn, produce draft proposals for management policies, to which
the corporation has to respond at the January session of the
consultative committee. It must be mentioned in this connection
that the national union has as its "industry policy" a document in
which conditions of the industry are analyzed from the trade
union point of view and statement of policy demands to employers
and their associations are made.
The joint production consultative committee at the yard level
deals with, according to the labor contract, items such as 1) the
implementation plan of orders and their progress; 2) improvement
of the working environment; 3) rationalization plans and efficiency
problems; 4) personnel questions; and 5) other matters as agreed
upon to be dealt with by the parties. With regard to the personnel
matters, the labor contract specifies in detail the reciprocal roles
depending on the nature of the item. In the case of Firm A, it is
mandatory for the company to consult the union before making
final decisions on such items as 1) annual recruitment plan; 2) the
standards of transfer of employees on occasion of larger number
of transfers; 3) all transfers requiring the change of residence of
transferees; 4) all cases of discipline and discharge; and 5) other
items as agreed upon to be dealt with this way. There are matters
that the company should explain to the union before the final
decision and also matters that the company should notify the
union of before taking action specified in the contract.
It should be noted that, as shown in Figure 2, within the
company hierarchy the industrial relations functions are located
at the point of critical decisions. They are represented in the
board and in positions directly reporting to the board. Also they
are in positions directly reporting to the yard superintendent and
plant manager. This is the same in all of the major yards in the
shipbuilding industry.
Problems and prospects
Since this paper has focused on some of the social and
organizational aspects that have led to the higher level of
participation consciousness among workers in the shipbuilding
industry, it must be noted here that the statements made did not
adequately cover the shadowy aspects of the realities of work
relations in the shipbuilding industry. Some remarks on this are
therefore necessary.
As was mentioned earlier, this industry in Japan is now one of
the "structurally depressed" industries. There is no bright prospect
for growth in volume. The wage level, which was until recently
one of the highest, is now below the average. The average age of
workers is rapidly going up; the problems of aging for the type of
work in the industry is serious, and in addition, given the type of
wage scales in Japan, aging means a rather conspicuous increase
of labor cost. Young students are now rather indifferent to
shipbuilding. The status of this industry in the labor market,
which was once prestigious, has rapidly sunk. And it is under
such circumstances that pressures for large-scale rationalization
are mounting. Thus the re-building of the industry into an
"attractive industry" is but one possible way for survival.
For those reasons and others, worker participation at the
industry and national levels is becoming an important agenda.
Although machineries already exist for this - the National
Shipbuilding Labor-Management Consultative Conference is one,
and the National Maritime and Shipbuilding Rationalization
Deliberative Council is another - the need for stronger involve-
ment in decisions in these machineries is being voiced much more
strongly by unions than in the past. The industrial relations of this
industry will probably involve in the not too distant future many
more decisions on the mix of cooperation and competition among
producers in the international arenas. I believe that exchanges on
how to re-build the "attractive shipbuilding industry" are a good
starting point in that direction.
 Bureaucratization and Professionalism as Options in the
Redesign of Shipbuilding Organizations:
Notes on the German Case
Heinz Dieter Meyer
Michael Gaffney A couple of years ago, I ran across a book by a
Michael Schumann dealing with the organizational implications of zone
construction implementation within German shipyards. Thus far, I have
only translated the table of contents, but it became clear that the work
would be of value to those concerned with a similar process taking place
today in U.S. shipbuilding. Then, illustrative of the small world pheno-
menon, I recently found a graduate student at Cornell who had conducted
a secondary analysis of the shipyard study by Professor Schumann. I
have prevailed upon him to discuss the results of that research with us
today.
Heinz Dieter Meyer is currently a graduate student in Organizational
Behavior at the New York State School of Industrial and Labor Relations.
Formerly, he was a graduate student and tutor of Sociology at the Univer-
sity of Gottingen, where he earned his Masters degree. His specialty field
is industrial sociology, particularly the relationship of technology andjob
design. In addition to his academic experience, Heinz has also worked as
a laborer in the steel, construction, and printing industries.
Abstract This paper distinguishes between bureaucratization
and professionalism as two ways in which to orient the moderni-
zation of shipbuilding. While shipyard management initially seems
to be inclined to prefer bureaucratization, evidence from the
organizational design literature as well as from studies of a case of
bureaucratic modernization in West German shipyards underlines
the importance of professionalism and informality as a competing
design option. This holds particularly if the high level of uncer-
tainty in the shipbuilding process is taken into account.
Without special attention by management and unions, the
process of modernizing shipbuilding tends to destroy informal
decision-making networks among yard workers without providing
substitutes of equal efficiency. Such options are, however,
available. They can be found in the tradition of the craft-oriented
workshop, the quality circle, and the multi-craft work team.
Utilizing these forms, shipbuilders can pursue yard modernization
without discarding valuable elements of traditional shipbuilding.
Introduction
During the last twenty years, shipbuilding worldwide has
undergone dramatic innovation after decades of technological
and organizational stagnation. Before that, technical and techno-
logical changes (riveting to welding) as well as changes in
construction material (wood to iron) had only gradually changed
the profile of the industry (Meyer: 6-13). Decreasing segmentation
of the international market, increasing competition for a shrinking
demand for shipping tonnage, and few (but effective) technical
innovations have dramatically changed that picture. Today, ship-
building worldwide exhibits a profile substantially different from
that of 25 years ago. However, the unique features of the ship-
building industry, as well as its strong ties to the construction
trades in general, do not allow shipbuilders to simply adopt the
methods of technological modernization employed in other
industries. This holds true for the process of organizational re-
design as well. The shipbuilding industry had and still has to find
out what is best for it on its own terms. In an industry that is
traditionally not very adaptable to innovations in management
techniques, and that leans towards managerial inbreeding (Mari-
time Transportation Research Board: 91), this is not an easy job.
Comparing the course of innovation in shipbuilding in
Germany and the U.S., one of the most visible similarities is the
tendency of managerial planners to adapt shipbuilding to methods
of bureaucratically administered, highly standardized rnass
production. Analyzing a task into its component parts and task
standardization through mechanization became the major opera-
tional goals of the redesign process in the German case. (Schu-
mann: 148; 151-154). The shipbuilding industry was seen to be a
late-comer in an inevitable and pervasive process of standarcliza-
tion and taylorization (Schumann: 81). According to
this view, the shipbuilding industry was ripe for a transition from
the old-fashioned and obsolete craft approach to modern methods
of mass-manufacturing,
This view also holds among representatives of shipbuilding
innovation research in the United States. A scenario of the future
of shipbuilding in the US., issued in 1979 by a panel of experts
organized by the Maritime Transportation Research Board
(quoted as "Maritime Transportation" below), depicts ship-
building in the U S , as heading towards deskilling and specializa-
tion of the labor force. Craftsmanship, thanks to some seemingly
irreversible trends such as a decreasing supply of traditionally
trained craftsmen and advancing technology (Maritime Transpor-
tation: 48,49), is treated as anachronistic and obsolete. The Board
assumes that these trends are convenient for an industry on the
brink of a major innovative change. Thus, "obsolete craftnian-
ship," rather than being taken as an alarm signal, is welcomed as
a guarantee of the industry's ability to adapt successfully to a new
environment. In both the German and the U.S. cases, the goal of
the innovation process was the transformation of the shipyard
into an assembly station (Schumann: 74, Maritime Transportation:
2).
The trend toward purchase and subcontractor installation of ship
components may well reduce the variety of skills required in the
shipyard, at the expense of increasing the burden on engineering
and middle-management personnel. . . . The heavy reliance on
vendors may have a side benefit in that it places the burden of
learning new ship component equipment technology upon the
vendor rather than upon the shipyard. Since the pace clf
technological change is increasingly rapid, . . . shipyards will nclt
be faced with the problem of maintaining an aging work force cf
increasingly obsolescent skills (Maritime Transportation: 99).
The argument in this paper runs counter to these mainstream
plans. Based on evidence from organizational design research and
on conclusions from the West German example, I offer the view
that the modernization of shipbuilding will benefit from prcfes-
sionalizing its work force rather than specializing and segmenting
the existing skills even further.
Contrary to the frequent emphasis on technological variables
of organizations, the discussion in this paper starts out by
accounting for some of the environmental parameters of
shipbuilding.
Shipbuilding: Management Under High Uncertainty
The administration of organizations confronts considerably
different conditions depending on whether it takes place in
environments of high or low uncertainty (Dill 1958, Jurkovich
1974). Generally speaking, high predictability or low envi-
ronmental uncertainty has been established as a precondition of
the rational, bureaucratic type of organization (Weber 1947 tr.).
High environmental uncertainty, on the other hand, provides
stimuli for the evolution of non-bureaucratic organizational
elements. Jurkovich (1974: 387) describes high uncertainty
environments as "complex, nonroutine, unorganized and with a
high and unstable change rate," with unstable change signifying
change in situations that are "loose and erratic." These variables
connote a "type 64" environment.
Organizations confronted with a type 64 environment have major
information problems, have very abstract, tentative sets of
strategies, operations, and tactics and cannot execute them without
expecting major alterations, have very vague coalitions that change
unpredictably; and are constantly redesigning decision making
programs or constantly making exceptions to existing decision
making programs. (392)
Scott (198 1: 168-169) suggests conceptualizing environmental
uncertainty along the parameters of homogeneity - hetero-
geneity; stability - change; interconnectedness - isolation;
organization - non-organization. The determination of ship-
building's relative place on such scales would be an interesting
aim of further research. At this point, a few illustrations must
suffice to underscore that the management of shipbuilding takes
place under high uncertainty.
Uncertainty in the external environment
The critical figure for the development of the entire shipbuilding
industry - the demand for new ships - is an aggregation of a
large number of short- and long-term trends which vary
independently from each other and provide an unstable and
erratically changing environment for shipyard management. Apart
from the influence of the business cycle, the demand for new
ships hinges on such unpredictable factors as shifts in worldwide
raw material consumption as it influences the demand for world
sea trade. The substitution of uranium for oil marks changing
demands on the capacity of sea trade that hardly can be predicted
by shipyard management. Worldwide economic trends, such as a
tendency towards production sharing "world products" which
are composed of sub-elements from manufacturing sites from all
over the world (Naisbitt, 1984: 67) and thus increase the demand
on sea trade capacity, have an equally important bearing on
shipbuilding.
International communication trends such as high priorities on
fast delivery can lead to an increasing preference for air over sea
transportation.
Given that the military commands a large portion of yearly
ship orders, the largely unpredictable long-term changes of the
international political situation and its influence on the current
defense policy are of critical importance, too.
The high heterogeneity of the external environment of ship-
building results basically from two sources: 1) the variety of
clients (government, private companies), and 2) the customization
of the orders placed by these clients. Since any order entails
highly specific needs of a client, the ratio of design hours/output
unit is extraordinarily high in shipbuilding.
While uncertainty coming from the demand side of the envir-
onment is thus very high, the uncertainty on the supply side is not
any less significant. Due to the large variety of raw material,
prefabricated parts and production equipment, suppliers for
shipyards run the gamut from steel mills to furniture producers
and from heavy equipment manufacturers to electronic parts
dealers. The interconnectedness of these suppliers is very low, so
that variations in price and supply conditions normally do not
correlate. The dependence of shipyards on a large number of
vendors is an element further increasing environmental complexity
for shipyard management.
Uncertainty In The Internal Environment
As Dill asserts (1958: 433), the structure of the internal
organization can be conceptualized as another part of man-
agement's environment. Traditionally, uncertainty along these
parameters of the environment was very low in shipyards. Craft
organization provided high compartmentalization, low inter-
dependence, and, subsequently, low coordination requirements.
In effect, traditional shipbuilding was able to offset high
uncertainty in the external environment by high stability in the
internal environment.
The beginning of modernization with its erosion of the craft
structure led to a change in the internal environment. Inter-
dependence between various departments called for scheduling
and coordination of efforts on the part of management. A new
group of managers had to be added to the traditional managerial
hierarchy of shipwrights and naval architects. This caused a rise
in the size of the traditionally flat organizational hierarchy of the
yard.
Relatively stable internal coalitions that lend predictability to
the internal environment, such as the one between pipefitters and
shipfitters in the German yards, were shaken up through the
process of modernization, and new coalitions began to form.
Standardization Of Parts vs. Standardization Of Tasks
The modernization process was, in part, designed to offset
increasing uncertainty by means of standardizing the shipbuilding
process. However, it can be concluded from the German example
that standardization was limited to the realm of parts (metal
components of all sorts). The standardization of tasks, which
solely connotes methods of bureaucratic "scientific management",
was confined to those few points in the yard where those parts
could be produced in large series. This was the case in preassembly
departments (Schumann: 118-120) and at some points where
pipe elements could be prefabricated in large series. The number
of workers involved in these jobs remained small throughout the
whole process. Even with welding robots the portion of tasks that
could be standardized, relative to the number of remaining tasks,
was small. The largest number of employees remained assigned to
assembling and pre-outfitting activities which require flexible
assembly teams in multi-craft groups (Schumann: 81).
In conclusion, we note that unlike organizations that may
temporarily or seasonally be exposed to extremes of environ-
mental uncertainty - as may be the case for organizations in
novel markets (such as information processing) or in periods of
changing supply/demand ratios (such as the steel industry) -
shipbuilding structurally confronts high uncertainty.
Zone Construction in West German Yards - A
Case of Bureaucratic Modernization
The following is a representation of features of the German
workforce as they appear in an extensive interview study of yard
workers' attitudes towards the effects of introducing zone
construction, pre-outfitting and other methods of modern
shipbuilding in German yards (Schumann, et, al. 1981).**
This study provides, in parts, striking evidence for 1) the
existence of professional standards among yard workers, 2) the
functionality of informal decision making in shipbuilding, and 3)
the importance of communicative flexibility. It also demonstrates
how the negative effects brought about by the elimination of these
standards by a technologically-minded management have re-
moved old forms of production without providing for modern
functional equivalents. The extent of informal worker control
over the production process in the German yards becomes visible
through the example of the workers' method of compensation
and time control. Yet it should also emerge from the quoted
documents that these methods were not unambiguously
detrimental to overall yard effectiveness.
Existence Of Professional Standards Shipyard Workers
One important result of the German study was to uncover the
existence of a large set of professional standards and norms among
yard workers. These standards served as guidelines for workers'
self-control and self-direction in lieu of close supervision and
control (Schumann: 329). They were, however, violated through
the process of introducing zone construction.
Thus, one pipefitter describes his anger with a management
unappreciative of his professional abilities and inclinations:
They really can make you feel stupid. You are aware because you
know from the planning process ... that certain parts are needed.
But then the shipwright comes along or he may have an order
from above. And he goes, "This is junk, we don't need it." A day
later they come and ask, "Didn't you have this particular part?"
"Yes," I say, "it was there yesterday, you disposed of it." - This is
what it's really like around here. (329)***
At the core of the professional conduct of many of the yard
workers are standards about technical precision and quality which
the workers more and more frequently, find they are forced to
violate in the course of the technological transition:
Today you are allowed to put connecting pieces on in a right
angle. We didn't do that formerly. We would use a saddle piece if
it had to get on straight. In order to have it flow with the stream.
Today they simply put it on slanting. ... Today, you can do this ...
Believe me, we don't like that around here. But these days it's a
rule. (330)
Instances such as these lead workers to perceive management
as uninterested and unwilling to cooperate with the work force:
You can't really cooperate with them. First, they don't want it and
then, if you have to endure this kind of nonsense ... You can tell
them what you want, but you've got no right. Even if it's wrong.
They do it their way ... (329)
With their professional self-esteem frustrated, workers report
withdrawing from their earlier practice of bringing production
frictions to management attention and instead use the problems as
an opportunity to take breaks.
Informal decision making
Any decision that a worker can carry out based on "built-in"
rules and professional standards reduces the decision making
weight on management and lends considerable flexibility to an
org anization.
Organizations, by their very nature as units of collective rational
decision making, exhibit, however, a tendency towards forn~aliz-
ing the decision-making process. The existence of an "informal
organization" (Roethlisberger 1939) thus was a signifi.cant
discovery in industrial relations research. Since then, students of
organizational behavior have begun to study seriously the benign
effects of informality on organizational life beyond the stimulation
of individual emotional well-being of members (Tichy 14173).
Recently, proposals have been made that aim toward directing
and creating informal networks in organizations (Krackard/Sltern
1985).
The survey of workers' comments on the shipbuilding prclcess
yielded considerable evidence of the functional importance of'this
informal network:
Sometimes we've got tasks that would require six men although
they are laid out [by management] for two ... We coordinate that
among ourselves so that a couple of guys join in because it's too
difficult otherwise ... It's not as stressing as with two and it's faster.
Whether you fix something heavy under the ceiling with four guys
or with two ... (384)
One source of the strength of informal networks seems to be
that workers are forced to learn from their own mistakes -- a
learning experience much more forceful than mere abstract
instruction:
...of course, sometimes one would get stuck at one point. I would
come with the pipeline from this side, my colleague from the other
and there would be a mismatch. But this would happen only once.
Next time I would talk to him first so it wouldn't happen again.
(333)
Instances in which management tries to interfere with partic~llar
patterns of this informal decision-making process demonstrate its
problematic nature:
We always divided up our work ourselves. Once, they tried to
dictate it. But they couldn't do that with us and had to leave u!i
alone. For example, we don't run only one program but three, four
or five. Then we are able to work on their [the metal sheets']
shapes better and can utilize the machine more effectively.
Whereas, if we run every single program separately we've got to
adjust the machine more frequently and exhaust ourselves muck1
more. (385)
Sudden material shortages, planning errors, or unavailability of
technical aid such as a crane are not unusual phenomena in a high
uncertainty environment. The informal decision-making network
among workers provided an efficient way to cope with these
events by instant and informal problem solving. Often this method
of problem solving implied deviation from an official practice, yet
it was for the good of the organization.
If, say, we would run out of one type of pipes - say 5 mm, which
happens today, too - we were able to take the 3.6 mm because
we knew the pipe system and that it would be good enough. (334)
After the implementation of zone construction, with its huge
administrative build-up, this kind of "solving a problem while ii is
small" was made difficult by a growing number of management
interventions:
The kind of work I've got has changed because everything we do
is administered by the planners. The element is planned, we
complete it and then it goes aboard. If it doesn't fit - I won't see it
again. Those people aboard fix it. - Formerly, I knew what I was
doing, say, which pipeline system it was.
Another pipefitter contrasts decision making and the scope of
executive discretion left to the worker under the "old" and the
"new" system, that is, before and after introduction of zone
construction:
Formerly, a pipefitter was most of all relying on his own initiative.
This new blueprint system - we didn't have that then. Practically,
every shipwright had his own "yard." He gave the orders and
that's how it was done. Thus, much [decision making] was left to
us. For example, we would get a certain type of pipe. If I had to
ask the foreman or the shipwright every time - that pipeline
would never be finished. So you see, that much [of the end result]
depended on self-responsibility and our own initiative. (333)
Communicative Flexibility
Research on efficiency and effectiveness of communication
arrangements in organizations indicates that different tasks require
different communication configurations (Bavelas 1959). The
contingency notion in organizational theory (Galbraith 1971)
implies that, rather than restricting a given work group to one,
presumably most appropriate configuration, an arrangement
which allows for communicative flexibility, can yield better
results. The redesign decisions carried out by the German yards,
however, started a process heading in the opposite direction.
Instead of preserving flexibility, it limited communication options.
Introducing and implementing zone construction required the
two German shipyards surveyed in the study to establish large
computerized planning and forecasting routines. Traditionally,
the planning process in shipbuilding had revolved around the
three separate crafts of pipefitting, shipfitting and riveting/welding.
Each craft was headed by a shipwright who directed the planning
process in accord with his journeymen. Unit construction, in
requiring the integration of these separate crafts, called for a
formalized, computer-based planning procedure, operated by a
large number of newly hired, computer-trained employees who
were, naturally, unfamiliar with shipbuilding. Large parts of the
communication process that previously were handled informally
by workers now occurred via computer printouts and blueprints
(Schumann: 338). However, these new means of communication
could hardly fully replace the previous informal and more flexible
communication routines:
Formerly, when a piece [of metal] was done it would, say, go to
the welder. Then you could talk to him and could tell him you'd
like it this way or the other. You can't do that anymore today.
-Or you would go to the mechanical engineer and you could tell
him to make this a little more slanted. Today that's impossible.
They lump it together and when it comes aboard, then, say, 50%of
it is wrong and we have to modify it. (330)
Though this "old" informal communication system certainly
could not be preserved in its existing form throughout the transi-
tion, management again proved insensitive by failing to take
counter-balancing actions which could make up for the loss in
communicative flexibility.
Formerly, the shipwright had to be aboard, too. Once or twice a
week one would meet him and, going aboard, there was a chance
for a chat. Certainly, one can go in and see him today. But still, it's
not the way it used to be.
Compensation And Time Control
Possibly the most striking and impressive evidence revealing
the scope and functional importance of an informal worker
network was the study's discovery of the existence of an unofficial
system of "stockpiling hours" for purposes of workers' compensa-
tion and time control (Schumann: 378-82) - a system which
closely resembles the routine of stockpiling relays evolved by the
bankwiring workers in Hawthorne's GE plant (Roethlisberger
1939).
To understand this, one has to know that the two yards, as all
the other German yards, used a piece rate system prior to the
introduction of zone construction. Under this system, any job
assignment passed down to a worker or group of workers was
accompanied by a time assignment, consisting of management's
binding estimate of the time-value of the task at hand. The sum of
those assigned "hours" was the basis for the monthly wage of
individual workers. These official time assignments, however,
frequently deviated from the actual time needed to complete the
job. In some instances the difference was in favor of the workers,
in some not.
Rather than arguing with the personnel department about the
established time value of any given assignment, the yard workers
throughout the yards evolved a method of "stockpiling hours."
This meant that hours were saved by finishing a task early in an
unofficial reserve called the "bank." From this informal account
these "hours" could be recalled and used any time a job could not
be completed in the allotted time.
Yes, of course, we have a bank. You've got to have that, a day or
two. You cannot go for every little thing, 'Hey, foreman, you've
got to write those minutes or so.' That's impossible. (382)
This unofficial system of compensation control provided yard
workers with considerable discretion regarding the actual work
flow and the pace of their job performance. In effect, it served to
buffer the workers' labor input from the official managerial
requirements and to smooth out any differences between the two.
We can work into the bank and the shipwright, he would say that
we have so many hours and that we can go slower. Or we fall
behind, we have to speed up. We are able to control the work a
little by ourselves. - We stay a little in charge, I mean, we have to
work, of course, but we are able to organize it a little as we see fit.
(381)
Impact of Job Training On Professionalism
It should be mentioned that professional standards and informal
decision making were reported in decreasing frequency as the
skill and training level of the workers decreased. This finding
suggests that professional standards in the trades are closely asso-
ciated with the specific socialization process provided by appren-
ticeship programs, which were obligatory for any "qualified
worker" (Facharbeiter), such as pipefitters and shipfitters, but
unavailable and, in this form also unsuited, for welders. In addi-
tion, it should be noted that the availability of these standards
obviously depends on their being reinforced through the daily
working routine - an aspect that may explain the lower degree
of professionalism of shipfitters relative to pipefitters (Schumann:
342-43, 351). The former, although subjected to a similar
apprentice training routine, are generally exposed to physically
more demanding and often less skilled work. At any rate, this
finding raises questions about suitable training and socialization
programs for yard workers in modern shipbuilding organizations.
Professionalism: A Viable Alternative to
Bureaucratization
Among organizational analysts the notion prevails that there is
no one best way to manage organizations, but that managers must
choose from a variety of different options, with the choice
depending on a number of environmental and other parameters
(Galbraith 1973, Perrow 1979). The mutual substitutability of
bureaucracy and professionalism as options of organizational
administration has been one of the prominent fields of research in
this contingency tradition. A large number of research findings
can be called upon that lend support to the theory that profes-
sionalism is a viable alternative to the rational bureaucratic
administration of organizations (Blau et. al. 1966, Blau 1968,
Hall 1968), particularly under conditions of high environmental
uncertainty (Heydebrand 1973).
Unfortunately, the concept of professionalism has been widely
equated with white collar occupations, thus precluding its appli-
cation to manual labor occupations such as those in the shipbuild-
ing or construction industries. This conventional association of
white collar occupations with the concept of "professionalism" is
readily understood. Self-directedness and a coherent occupational
culture are most easily associated with the kind of work to be
found in complex white collar jobs. The Western European and
Japanese tradition of guilds and the journeyman system show,
however, that, at least initially, professionalism doesn't necessarily
preclude manual labor. Stinchcombe, in an early comparative
study of bureaucratic and craft administration in the construction
industry (Stinchcombe 1959), takes one of the rare exceptions to
these misleading generalizations. He asserts that "administration
in the construction industry depends upon a highly professional-
ized manual labor force" (168). In particular, he emphasizes the
preferability of professional or "craft" administration over
bureaucratic administration under conditions of high economic
uncertainty:
... we maintain that the main alternative to professional socializa-
tion of workers is communicating work decisions and standards
through an administrative apparatus. But such an apparatus
requires stable and finely adjusted communication channels. It is
dependent on the continuous functioning of administratorsin offi-
cial statuses. Such continuous functioning is uneconomical in
construction work because of the instability in the volume and
product mix and the geographical distribution of the work.
Consequently, the control of pace, manual skill, and effective
operative decision ... is more economical if left to professionally
maintained occupational standards. (169)
Particularly the construction industry, to which shipbuilding is
very similar (Maritime Transportation: 52, 63), appears to be a
site of traditional "blue collar professionalism" - largely inde-
pendent of changing trends in management style.
In recent years the issue of professionalism in organizations
operating under high uncertainty has attracted renewed research
interest and supplied a number of bestselling authors of popular
management literature with a considerable stock of ideas (Peters/-
Waterman 1984).
This, by itself, should provide sufficient cause for shipyard
managers to survey existing human resources in order to determine
how much and what kind of professionalism currently exists
within the shipbuilding work force. However, this doesn't seem to
be the natural course of events, if the German case of technological
and organizational redesign is characteristic.
Organizational design options: workshop, quality circles,
multi-skill work teams
Research on organizational design has shown that managers
who want to encourage professionalism can choose from a
number of different organizational forms. The traditional "job
shop" (Werkstatt) approach that existed in German yards was
certainly one option - the job shop being defined as the unit of
data projection, data transfer or task design, and task execution.
Contingent factors within this system were a low degree of
bureaucratization of planning and design and a high degrete of
professional socialization of the work force through high quality
apprenticeship programs.
Japanese quality circles seem to fulfill a lot of similar functions
in technologically more advanced production processes (Cole
1978).
Finally, multi-skill or multi-craft work teams that are recom-
mended to U.S. shipbuilders (US. Department of Transportation
1983) may serve a similar purpose in cases where a long-standing
tradition of craftmanship is not available.
By experimenting with any one of these designs, yards may
recognize the beneficial import of professionalism on organiza-
tional effectiveness and come to a suitable application of
professionalism in the modernization of shipbuilding organizati13ns.
Conclusion and Further Research
This paper discussed contingencies of management strategies
and decision-making processes in shipbuilding. Unlike the
tendency to credit technological innovations with a superior
influence on organizational effectiveness, this paper noted the
existence of two competing options for organizational design -
professionalism and bureaucratization - and discussed their
respective influence on overall organizational performance. On
the premise that shipbuilding is conducted in a high uncertainty
environment, the paper concludes that professionalization is the
more desirable option. Shipbuilding managers considering the
professionalism model are encouraged to:
1) re-evaluate existing craft structures for the benefits of
professionalism, rather than consider them only as
anachronisms,
2) provide training and socialization programs for the work
force that stress participation and self-directed probl1:m
solving,
3) examine the redefinition/expansion of narrow craft jurisd.ic-
tion. This is particularly relevant for American shipbuilding
where craft lines are so narrowly drawn. The German
example shows that redefining craft boundaries is an activity
where both management and labor can win.
Within the suggested conceptual framework, the Japanese
example of shipbuilding modernization would be an interesting
subject of further research. To what extent does it qualify as an
example of the "professionalism" option described above? How
important are participative elements of organizational design in
Japan, such as quality circles and particular occupational norrr~s?
Does zone construction in Japanese yards entail a bureaucratiita-
tion of the work force?
Finally, what was the effect of Japanese management's attempts
to decrease environmental uncertainty on the overall increase of
shipyard productivity, particularly by marketing strategies?
**The study is based on an extensive interview survey of shipyard
workers conducted from 1976 to 1978 in two of the five major
West German shipyards. Of the 134 open-ended, semi-structur~:d
interviews, 41 were conducted with pipefitters, 42 shipfitters, and
51 welders (Schumann: 43).
***Interview selections translated from the Germans by the
author. All numbers in parentheses refer to Schumann 1982.
 Technological And Organizational Change In European
Shipbuilding
Peter Lazes
Michael G a m y Peter Lazes is a laborlmanagement consultant who
has helped establish and guide employee participation activities in both
the public and private sectors for over 14 years. In addition to current
work with Xerox Corporation, the Philadelphia Health Department, Bell
Laboratories, and Beaumont Shipyard, he has helped to establish
Employee Involvement processes at several General Motors plants and at
Sun Shipbuilding and Dry Dock Company.
Dr. Lazes works actively with the United Auto Workers, International
Association of Machinists and Aerospace Workers, International Brother-
hood of Boilermakers, District Council 1199 ofthe Hospital and Health
Care Workers, and the Amalgamated Clothing and Textile Workers
Union. Presently Dr. Lazes is Co-Director of Programs for Employment
and Workplace Systems at Cornell University, which is involved in
research and the development of projects designed to integrate social and
technical resources of organizations.
I'm glad to be with you again. It's been two years since I
participated in the first workshop on this topic, and at that time I
believe we had eight yards and one union in attendance. Consid-
ering the size of this group, the subject of organizational change
must certainly be of interest to American shipbuilders, and much
credit for bringing the various parties together must go to Frank,
Howard, and Mike.
John Stepp mentioned this morning that this workshop, and
the SP5 Panel, constitute one of the first cases of "industry-
specific" sharing of workplace change information. I don't think
that this is an accident; I think it reflects the fact that the ship-
building industry in this country is in jeopardy, and must change
rapidly in order to survive.
I am not presenting myself today as an expert on European
shipbuilding, because I spent only three weeks there on my recent
tour. But I do want to share with you what I observed in Sweden,
Norway, Holland, and England. I visited seven yards and eleven
work research institutes. Rather than give you a generalized trip
report, I think it would be more useful if I highlight specific
changes that relate to the sort of innovations that have been and
will be discussed in this workshop.
Let me start with a personal vignette that came to mind as I
was preparing my remarks for this workshop. When my son,
Andy, was four years old he produced a piece of artwork while
visiting my in-laws that generated a lot of analysis by my mother-
in-law. She was very impressed by Andy's painting and searched
deeply for the meaning and significance that she was sure was
contained therein. Being the proud parent, I joined her in this
exercise in art criticism. Not being in complete agreement as to
what the artist was trying to say, we finally turned to Andy for his
view of the meaning of the piece. He replied, "Paints, can't you
see? It's paints."
In the same vein, the subject we are dealing with today proba-
bly has received a lot more analysis than might be considered
warranted by those who are closest to it. Much of it is simple
common sense. Getting people closest to the work involved in
decision making relating to that work is an obviously sensible and
rational thing to do. And most people have considerable respon-
sibilities and decision-making latitude in their daily lives. Yet
when those same people walk through the gates to a factory or
shipyard, the flow of information slows and decision-making
authority becomes constrained. The adults that enter the plant are
treated as children.
Regarding this same paradox of the obvious also being sophis-
ticated, I recall my discussion with two prominent researchers at
the Stockholm Work Research Institute. The subject was not just
innovation in Swedish shipyards, but in workplaces generally. I
was sharing with them the contents of the Proceedings of the first
U.S. workshop on this subject held two years ago. One of them
turned to me and said, "You know, Peter, that is what we (the
Swedes) did fifteen years ago". The point he was making was that
employee involvement and self-managing small work teams were
old hat to them, and not even considered innovative any longer.
What I found out in my travels, however, is that these concepts
may have been "old news" to the researchers, but that for the
most part they had not been widely instituted throughout Europe,
even in Scandinavia.
So let me proceed with some description of structural changes
that 1 saw on my visit. I hasten to add this caveat: these
innovations are not appropriate for all varieties of shipbuilding or
shiprepair activities, nor may they all be transferable to the U.S.
shipbuilding environment. There are certainly lessons to be
learned, but they have to be carefully gleaned.
I also want to point out some other supporting activities (such
as management development and coaching) were occasionally
significant in their absence. In our action research at Cornell, we
are finding that it is not enough only to help management learn
what to do, it is also important to work with them in developing
structures and training programs that will sustain change over
time.
I also want to discuss the role of unions in these change
processes. Throughout Europe it varies from yard to yard. There
is no standard arrangement.
Additionally, I will talk a bit about skilled trades training, and
also about the new roles of supervisors and union officials.
Again, what I am giving you today are only "snapshots" of
what is taking place overseas. Perhaps it will stimulate some of
you to make the trip so that you can see for yourselves what
works and what doesn't.
Let me begin by being very clear on the definition of a few
terms:
-Descriptive of an employee who is capable of performing a
number of technical tasks broader than those traditionally
performed by a single individual.
"Multi-craft"
-Descriptive of a work group composed of more than one trade
or craft. Multi-craft work groups are formed of workers whose
capabilities and work practices allow them occasionally to
assist in trades other than their own, but they are not "multi-
skilled" as defined above.
-Descriptive of a work group (multi-skilled or multi-craft) in
which primary responsibility for budget, quality, supervision,
coordination, and work process improvements (problem
solving) is resident within the group itself, rather than provided
by external staff functions.
 I am going to focus on developments in three European yards,
The Arendal Yard of Swedyards, Clyde Dock Engineering in
Glasgow, and I.H.C. Smit Yard in Holland. These developments
are best appreciated in light of what has been going on in work
reform throughout Europe in the last 20-25 years, particularly in
Scandinavia. Generally known under the heading of "industrial
democracy," these reforms have to do with legislated requirements
for involvement of workers and/or their representatives in
shopfloor and highest level decision making within firms. The
largest companies are most affected by these work reform laws,
and that certainly includes the major shipyards. The point is that
these workplace changes in Europe are the product of widespread
and deeply rooted political and cultural concerns for the
participation of workers in industrial decision making.
That certainly has not been the case for the United States
where there is no political or cultural groundswell for industrial
democracy. Actually, in this country we have seen a significant
shift in the last decade from concern for job satisfaction (which I
continue to think is an important issue) to a concern for economic
survival. That is why the expression "quality of work life" (QWL),
used frequently during the '70s to refer to changes of this nature,
is seldom employed any longer. "QWL" just doesn't capture the
urgency or economic necessity for change in the 1980s.
When I spoke to the Scandinavians about the economic or
survival value of workplace changes, they found it difficult to
respond, as their orientation continues to be framed by this socio-
political perspective of empowering the workers.
Let me focus first on the Arendal Yard of Swedyards. The
facility was built in 1963, and by 1977 employment was nearly
4000. By 1982, employment levels had dropped to about
3500. The yard concentrated initially on bulk carriers and reefer
ships, but in the early '70s was restructured to correspond to a
more varied product mix.
FIGURE 1:
GOTAVERKEN
ARENDAL Marketing
1 4-1Administration
I Projektledning I 1 Teknik I I
I I
I,
(Project Groups) (Engineering
incl. QA/QC)
The central element to this restructuring was in the shift froin a
functional or system orientation to that of a product or prqiect
orientation. A project leader would be assigned responsibility for
a defined work package, and this individual would oversee all the
crafts working on that particular unit or module of a ship or rig
under construction. This particular yard, Arendal, did not employ
multi-skilled workers in the small work teams supervised by these
project leaders. These work teams were, however, multi-craft.
The yard told me that they recruited these project leaders, and
other managers, not from the traditional shipbuilding crafts, but
from the construction industry. Even though these people had no
previous experience in shipbuilding, it was felt that this deficiency
was more than offset by their experience in coordinating and
supervising the simultaneous activities of a number of crafts.
The multi-craft small work teams (composed of from 10 to 50
indiv~duals)are largely self-managing in that they have respon-
sibility for dimensional control and budgetary control for their
work packages.
Products and engineering at Arendal have been standardized as
much as the market will permit. The project orientation is
facilitated by standardization but does not absolutely require it.
There has been no large-scale training effort associated with
this shift of orientation at Arendal. The workers are still workmg
largely within their established trades, and, as I stated earher,
much of the management was recruited from outside the
shipbuilding industry. It is felt that the cohesive nature of he
community from which the work force draws, and the example
shown by the newly recruited managers, would be sufficient to
accomplish the shift in a reasonable period of time without a
costly training program.
Finances
~)rn~l~o+;nn I
l lUUUClC1Ull
I I I I
 Questioner: At Arendal, is the worker's primary loyalty to
his project group, or to his craft?
Peter: I would say that primary loyalty is still to the project
work group. If there is a conflict between craft and project
management, I believe it is resolved according to the nature of the
argument. If it is a technical question, the craft manager will
prevail. If it is a matter of schedule, or coordination, the project
leader will prevail. The key is that production workers are
assigned to work in groups to do specific fabrication work as a
welder, ship fitter, pipe fitter. The emphasis is on getting each unit
completed.
Questioner: Peter, I think it is important to stress that
budgets, normally the concern of craft department heads and ship
superintendents, are now the concern of small work teams and
project leaders.
Peter: The responsibilities of craft department managers is
no longer mere production budgets. Their responsibility is pri-
marily found in the training of their employees, to make sure they
have needed equipment and material, and to assist them in solving
technical problems.
Questioner: Is any effort being made to make the project
group stable across projects (from one work package to the next)?
Peter: They try to accomplish this as best they can, but they
don't allow continuity of association within the groups to result in
idle time, which could result if the contents of, or schedules
within, work packages were quite dissimilar. I should also point
out that the physical layout of the yard is such that process lanes
facilitated the stepwise accomplishment of work packages in very
neat order.
Questioner: Your description brings to mind one U.S. yard
that makes use of an arrangement somewhat similar to Arendal's
project orientation. Ingalls calls this approach "stationization."
I.C. Schmidt Shipyard's current specialty is dredges. Employ-
ment in 1979 was 2500, it is now down to 1500. Since 1982 the
yard has employed consultants to assist them in a change effort
that has involved production, management and, to some extent,
the trade union council of the Netherlands.
At Schmidt they have introduced change in one segment of the
operation, rather than throughout the yard. Their experimental
area, so to speak, is the machine shop. The innovation has to do
with the introduction of self-managing small work teams in the
machine shop. They employ no first line supervisors in this area,
the hourly workers perform supervisory functions themselves.
Such work groups range in size from 10 to 14 individuals.
The payment system has been modified as well. There is now
in place a "pay-for-knowledge" arrangement which translates
into three levels of compensation for hourly employees. The two
higher level wages are available for those employees who wish to
become multi-skilled, or who wish to take on team leadership
responsibilities. Opportunities for greater job responsibilities are
strictly voluntary, and the yard has had no shortage of volunteers,
even for the leadership positions.
There has also been some revision of terminology at I.C.
Schmidt. "Production Bosses" are now called "Production Co-
ordinators". These coordinators function in much the same fashion
as the project leaders at Arendal. They are responsible for the
provision of tools, material, and training for the group members.
The process of change thus far has been driven largely by the
production manager and top management (in consultation with
the labor council). The plan for expansion of the system calls for
involvement of a larger group of management and hourly
employees.
The results have been quite dramatic. Since the introduction of
the self-managing small work teams in 1982, productivity has
improved 60%.
The last yard I would like to discuss today is Clyde Dock
Engineering, a small repair yard on the river Clyde in Glasgow.
The yard has only 175 employees, 150 of which are hourly and
25 management/clerical. All 175 have guaranteed employment.
The yard was closed in 1977, and re-opened in 1981 when the
current general manager arranged for new financing. When the
yard re-opened, a very different operating philosophy was
established based on employee involvement and work redesign.
For Clyde Dock Engineering, work redesign took the form of
multi-skilled work groups. This was the first instance of such an
arrangement in U.K. shipbuilding or shiprepair, and the general
manager recalls that it was an idea whose time had come.
"It was obvious, the need for changes. Anyone who has worked in
a shipyard knows there needs to be cooperation between the crafts
and we had to set up a process to do it. The craft lines that we had
before just didn't work."
Prior to the re-opening, this general manager spent 3-4 months,
15 hours a day, with the management team to prepare them for
operation under a multi-skilled work group system. The change
was so substantial that it could not just be "wished" in. It was
important that the entire management team was supportive of the
change. Once the management team understood the new
operating principle, they developed procedures manuals to clarify
the new procedures and system. From my own experience, I can
attest to the importance of embedding of change within the entire
organization especially the critical need to involve the manage-
ment team. It takes a highly involved and visible CEO, as well as
commitment from managers and union leaders to make it happen.
I think Clyde Dock's philosophy towards multi-skilling deserves
close attention, so I'll quote Burt Ellison, their CEO at length:
"You can't be ridiculous about multi-skilled work groups. You're
talking about the blending of skills, not the wholesale retraining of
the entire workforce. You are crazy if you take a highly skilled
pipefitter and a highly skilled welder and train them to do each
other's trade. You want to have some tradesmen able to assist
others in different trades, but you don't want to go overboard. I try
not to be brutal about the need for change. The perspective of
creating flexibility is to get coordination and flexible work routines.
It was hard for some of the managers to understand this concept in
the beginning. Flexibility is critical in getting more quality work
done and cutting down on waiting time. You can't be ridiculous
about the multi-skilled activities. It won't work."
I mentioned earlier the importance of top management visibility
in sanctioning and participating in the change effort. The small
size of Clyde Dock Engineering allows Burt Ellison to go one step
further. All new employees are oriented by the general manager
before they begin work. In Burt's absence, this function is
performed by the production manager. The general manager also
holds frequent meetings with the entire yard to discuss marketing
opportunities and production problems. This sort of personal
attention is obviously facilitated by the small size of the yard,
but there is substantial room for improvement in yards no matter
how large. A little personal touch goes a long way.
A counter argument to this sort of activity on the part of top
management is that it is too time-consuming, that high level
managers are busy people and have many other things to do. I
think Burt's observation on this point is interesting. He said that
under the old method of doing business, he, as production
manager would spend 30% of his time dealing with personnel
grievances. Under this new system, his production manager spends
only 3% of his/her time on grievances. So perhaps it is not a
question of "zj" but rather, "when" personnel matters are attended
to (up-front consultation, or remedial grievance processing). It
reminds me of the commercial, "You can pay me now, or pay me
later."
My impression from visiting all three of the yards I have
discussed today, is that they initially focused on their problems
rather than jumping quickly to solutions. This is also the process
described by Bud, Ken, and Barry from the Beaumont Yard. I
think we tend to fixate on solutions, rather than problems because
they (solutions) are easy to get your arms around and also because
problems require difficult and sometimes painful self-analysis. On
the subject of "jumping to solutions", a few comments on quality
circles might be in order. Many American firms have latched on
to this particular solution without giving much time to analysis of
their problems. It was interesting to hear Prof. Okamoto comment
today that quality circles in Japanese shipbuilding are just one
small element of a much larger and comprehensive process of
analysis and innovation.
Which brings me to the role of the shipyard's technical
department in helping to bring about organizational change. Too
often this change process is considered something for the hourlies,
not management nor the technical staff. In fact, the most
significant innovations, require change at all hierarchical levels
and in all departments. For engineering, the shift to a project
orientation has proven to be no problem in these yards. They are
enthusiastic about the change. They have the technology (CAD)
and the manufacturing model (zone production) to support multi-
skilled or multi-craft self-managing small work teams once they
are directed to d o their work to conform to these new production
needs.
If all else fails there still are some important strategies which
can be initiated to help save the jobs of shipyard employees. In
Landskrona, Sweden after several years of debate, the Swedish
government in 1980 decided to close down its yard in this town.
But instead of just accepting the unemployment of 3200
employees as inevitable, the management and union of the yard
in conjunction with governmental officials decided to establish a
process to save these jobs by creating new companies on the
physical site of the shipyard. There are now over 40 new
companies and in the facilities of the Landskrona Shipyard. Over
70%of the shipyard employees are working for these companies.
Most of the rest of the "old" employees work in other companies
in the town. Although a majority of the products of the new
companies have been primarily centered on shipbuilding and
shiprepair related work, several firms have been set up in product
and service areas quite removed from marine construction. There
are several high-tech firms. There has been a successful company
which manufactures hearing aides as well as several new service
organizations that now operate in Landskrona Shipyard.
I'd like to close with a quote from a book written by Norbert
Weiner in 1950. The author's subject matter was the use of
computers.
"I'm afraid that a community of human beings is far more useful
than a community of ants. If human beings are condemned and
restricted to perform the same function over and over again, he or
she will not even be a good ant, not to mention a good human
being. Those who organize us according to perfect individual
functions and perfect individual restrictions condemn the human
race and move at much less than half speed. They throw away
nearly all our human possibilities by limiting the road to which we
adapt ourselves to push to future contingencies and reduce our
chances for a recently large existence on this earth."
In closing, I would like to express my thanks to the German
Marshall Fund for the small travel grant which enabled me to
visit European shipyards.
Questioner: Peter, it seems that the project leaders functicln
as mini-ship superintendents at the Arendal shipyard, the size of
the work package and the number of workers coordinated being
much reduced.
Peter: That's right, except that the small work teams under a
project orientation remain together as a unit for as long as possible.
A traditional ship superintendent oversees a much larger work
force; it is a work force constantly changing. Arendal management
is making a substantial effort to keep intact their project teams.
That does not mean that the traditional craft departments are
done away with. As figure 1 shows, they are still there in the yard.
However, under the new system a craftsman turns to that
department only for technical assistance. It is the project leader,
and not the head of the craft department, who now manages the
workers' time.
Questioner: What is your perception of recent innovations in
shipyards in Europe regarding their use of human resources?
Peter: They are far more advanced than us. Most of what I
did see has to do with common sense management coupled with
improved production processes to make better use of the skills of
employees. I have to say that I consider this innovative because I
see very little of it going on in the States. I think Burt Ellison of
Clyde Dock Engineering typifies this approach. He treats his
people with respect and listens to them. He sees hourly employees
as blue collar experts. He takes every measure possible to hold on
to them, to keep them employed. There is job security for the core
group of 180 employees in the yard. I feel this is innovation, even
though it makes good common sense.
Questioner: At the Arendal yard, are trade supervisc~rs
provided for each trade, or are broadly skilled supervisors
responsible for all the crafts in a project team?
Peter: They are at the point now where all supervisors are
broadly skilled. But I want to emphasize that they value
supervisors more for their general organizing and coordinahg
skills than for technical expertise in the crafts.
Questioner: How did Arendal deal with the natural fears of
the employees in shifting from a craft-oriented system to a
project-oriented arrangement?
Peter: They did it very slowly. However, the president of the
company told me he wished that they had done it more rapidly. I
gathered that the engineering department played a catalytic role
in that they produced work packages that would be difficult to
accomplish in the old manner. They also did considerable
preparation throughout management ranks. I'm afraid I didn't
have enough time to get more information to answer this question.
Questioner: I am interested in a statement you made about a
company that was interested in new products other than marine
construction. Did those alternative product suggestions come from
employee involvement groups, and how did they do the
marketing?
Peter: In the shipbuilding industry, I visited one facility that
was engaged in the development of alternative products. At
Landskrona, Sweden, the ideas for new products came from many
sources, some from the workers, and some from management of
the yard. The yard was closed as part of a national rationalization
effort on the part of the Swedish government. The work1:rs
through their union and management developed ideas for new
uses for the physical plants, and the government assisted with
additional ideas and with some capital.
 Employee Involvement at Bethlehem Steel:
Awareness and Application
John Eck
Michael Gaffney John Eck spent 13 years as an ore miner before
becoming a machine operator at Bethlehem's Lebanon Plant, fabricating
railroad spikes and mine roof bolts. Since 1981, and until very recently,
he has been plant coordinator for employee involvement at Lebanon.
Currently, John is an employee involvement specialist at-large for the
Bethlehem Steel Corporation.John is a member of the Steelworkers.
This afternoon I am going to discuss with you two important
topics: awareness and application.
Awareness is "recognizing or being exposed to the need for
change." Application is actually beginning to change behavior by
doing something different.
I would like to ask you to participate in a little exercise that
will help to demonstrate the difference between awareness and
application. To begin, would you all please stand.
My first comment to you is, "Through extensive research, the
Surgeon General has determined that smoking may be hazardous
to your health." The findings were continually communicated to
the public and printed on each pack of cigarettes. Therefore, it is
safe to assume that everyone in the world is "aware" of this fact.
In view of this information, anyone who is still smoking, please sit
down.
My second comment to you is, "The Food and Drug
Administration performed extensive tests on the effects of caffeine.
By inserting mass quantities of caffeine into the diets of laboratory
rats, the F.D.A. proved conclusively that caffeine has an effect on
the central nervous system." In view of this information, anyone
who is still drinking coffee, please sit down. However, anyone
drinking decaffeinated coffee can continue to stand.
I have one more comment. "Through an extensive research
program, the federal government determined that most auto
accidents happen within five miles of home. Therefore, the federal
government recommends that seat belts be used no matter how
short the drive." Anyone who uses seat belts all the time when
they drive, stay standing. Anyone who doesn't, please sit down.
To those of you who are still standing, you have decided to
change your behavior by doing something different; thus
awareness resulted in application. I applaud you and you may be
seated. Thank you for participating in this exercise.
In each case, everyone was aware of the condition or situation
described. However, as some of you began to sit down, it
illustrated that you did not choose to respond to this awareness by
changing or modifying your behavior. You evaluated the situation,
made a decision, and continued to perform in the same way
despite the information that appeared to warrant a change in
behavior. This exercise begins to identify the initial steps of a
change process: a) awareness of need, b) performance of new
behavior, and c) preference for new behavior.
People do change, organizations (business/industry) change,
technologies change. The reason that people, organizations and
technologies change is, in my opinion, because of the impact of
the external environment and the internal environment. Let's look
at the shipbuilding industry to make my point. When I mention
external environment, I mean the environment outside ship-
building - such as the economy and/or market for products.
When I say internal, that means "inside" the individual
shipbuilding companies.
What is happening in industry is affected by those outside
forces which, in turn, greatly change the forces internally - for
example, the economy, which has for some created instability,
which creates change. Fortunately, some industries are able to
recognize and have an "awareness" of that and are willing to
make the effort to adopt the necessary changes to remain viable
enterprises.
Conversely, there are those managers who were presented with
the same circumstances, evaluated the situation, and made the
decision to continue to perform the same way despite the
information that appeared to warrant a need for change.
If you are part of the group that recognizes the need for change,
it is your responsibility as a manager to present to those within
your organization (who have been doing business the same way
for a long time) the concept of the awareness for change.
Unfortunately, some are looking at making changes only within
technology and completely ignoring their most valuable resource,
their people.
For a business to make changes, in my opinion, it must change
all three (people, technology and the organization). I call that a
"change process," and it is difficult - it takes time and effort, it
requires patience and tolerance, you must be committed, it
requires understanding, demands cooperation (especially if unions
are involved), and you must have a willingness to work at it. If
there is a resistance to change, is it a function of the individuals
involved, or of the way the organization manages them?
First, there must be an awareness of a need for change, then a
pressure for change must be felt before change will take place. Let
us assume that an organization has recognized the need for and
wishes to initiate a change process. In instituting a change process,
most organizations will find it absolutely necessary to make
existing labor unions a valuable partner. Plant management needs
to convince local unions that they are making a serious effort to
change the labor-management environment in a positive direction.
One of the vehicles most widely used is the implementation of
Labor-Management Participation Teams and/or Quality Circles.
LMPT, quality circles, etc., involve commitment not only to
productivity and quality, but to the self-development of em-
ployees. Union involvement will ensure that there is equal
emphasis.
It is at this point that labor union resistance may be felt quite
strongly.
Some unions claim that employee participation will divide the
worker and his elected bargaining representative. Some unions
also claim that the union will work with management through the
already existing structure of in-plant union representatives, such
as shop stewards and grievance committeemen. They ask: Why
do we need some new organization when one already exists to
handle these matters of mutual concern?
Another union concern is: What is the company going to do
with its share of savings that could be incurred by teams? Are the
workers who invest their time and energy on teams being
adequately and properly rewarded for their participation?
Union leaders have good reason to question labor-management
participation teams, quality circles, etc.
In many companies, management commitment to teams,
quality circles, etc., is superficial at best. For the union leadership
to commit to participation without a corresponding management
commitment constitutes a form of political suicide, for which
most union leaders have little desire. That is to say, the political
consequences of going out on a limb with the membership, only
to have management saw off the limb later, are not to be taken
lightly.
The primary purpose of an employee involvement process is to
bring a common understanding to all employees of their real
worth to each other and to the organization, and to make us
realize how we can enhance the conditions that exist in our
respective businesses. It will also help develop (collaboratively) a
system which will allow employees to make decisions affecting
their jobs and workplace.
The contract, the roles and the procedures will always be there.
The process, if structured properly, will maintain the status quo.
I believe employee involvement efforts have been and are
concentrating on structure and not on sharing philosophies
between labor and management.
For employee involvement efforts to be successful, labor and
management must have shared values. That takes work and a
commitment to work at it, as I stated earlier when I talked about
change. My experience has been that, where this kind of effort
has taken place and is an on-going process between labor and
management, the employee involvement process has more
meaning, is valued more and is embraced by both constituencies.
There is a need to build on those shared values that will help
create a successful effort. In turn, this will create an effective and
efficient business.
In 1980 the Bethlehem Steel Corporation, reacting to the
obvious need for action due to the fluctuating market for their
product and the changing work force, instituted processes that
were the basis of a very successful and on-going program of labor
and management cooperation and collaboration.
One of the very first joint efforts between labor and manage-
ment was the formation of Labor-Management Participaiion
Teams, known as LMPT's. These teams are made up of voluntary
groups of employees from the same or related work areas .who
meet to solve work-related problems. Presently within the corpor-
ation there are six facilities with active LMPT's meeting regularly,
and two other facilities in the formation stages.
Another example of joint efforts of labor and management
would be the coordination of customer visits to the various plants
to meet with employees to discuss mutual concerns regarding
specific products.
With regard to the "white collar" effort within Bethlehem
Steel, a participative process has been implemented, and is on-
going, in sales offices across the corporation and within the home
offices.
In addition to involvement with labor and salaried employee
programs, management has also formed quality teams using the
Juran method to identify, analyze and develop solutions to
quality-related problems.
I would like to quote Peter Drucker, behavioral scientist, who
said:
One has to assume first that the individual human being at work
knows better than anyone else what makes him/her more
productive; even in routine work, the only true expert is the person
who does the job.
All of these examples of on-going applications, as well as
programs planned for the future, confirm Bethlehem Steel's
awareness for change and the commitment to work with tlieir
employees to strengthen the cooperative effort to ensure a
successful future.
Let me close with a quote from the philosopher Plato:
Tell me and I will forget; show me and I will remember; involve
me and I will understand.
 Alignment of Management Structures in Support of Labor-
Management Cooperation Efforts
Randy Duke and Jess Christman
Michael Gaffney Randy Duke and Jess Christman are partners in the
consulting firm, CORE Group.
Prior to joining the partnership, Randy held a position as Senior
Consultant with the American Productivity Center, where he served as
Project Manager for the consultative work undertaken for Cameron Iron
Works and for white collar staff of Bethlehem Steel Corporation. In
addition to his current consulting assignments (American Airlines,
Bethlehem Steel, Cameron Iron Work, Eastern Airlines, Southwestern
Bell, and Western Airlines) Randy also serves on the faculty of the
Human Resource Management Department of the Universityof Houston.
Jess Christman was also with the American Centerfor Productivity as
a Senior Consultant, and before that as Quality of Work Life Consultant
on the Industrial Relations Staff of General Motors. Jess has been
involved in development of joint union-management efforts in )peen
locations throughout the United States.
Randy Duke I would like to start by telling you a little bit
about myself and the approach that I'll take. I became involved in
employee involvement as a member of the armed forces; I was in
the army. The army is dealing with a lot of the same kinds of
issues that the shipbuilding, automobile, and airline industries are
dealing with. It is basically the issue of how to change in a
turbulent environment in a way that will allow you to perform
your job more effectively. I spent a number of years working on
that issue with them. I then went to Shell, then on to the American
Productivity Center, and finally joined Jess Christman, who is
also a partner in the CORE Group.
My focus normally is to be very practical. I'm very mindful of
the expression KISS - "keep it simple, stupid." If we get down
to the basic concepts we will do fine. But at the same time I
would like to stretch our thinking as we move through the next
half hour.
There's a helpful notion that says you see change when the
following happens: when dissatisfaction with the present is greater
than the rewards of the present. But that in itself is not enough.
The next thing that you need for change to occur is practical first
steps. Some of you may say, "Hey, work redesign innovation is a
great idea, how do I start, where do I go?" One of the things that
we've discovered is that it's very important to work with a
management group as you move forward and there are some
important reasons for that.
The first one is that when you think about an organization, the
first picture that pops into your head is a pyramid. This structure
made a lot of sense for many years in terms of how we manage
our businesses. It consequently created a class of people called
managers. The pyramid is designed to operate very effectively in
an environment that is relatively stable and has relatively limited
competition. It is designed for information to flow up and down.
A lot of times, however, the focus is more on the down direction.
One of the main points that has been reached today is that this
type of managing, which has been operational over the past
hundred years, is gone. It's leaving the scene. Surprisingly enough,
places that you wouldn't expect, like the army, which is moving
to a regimental and a cohort system, are also realizing that. The
way we think about managing our resources is radically changing.
W e are moving away from thinking about managers as a class of
people to thinking of management as being a necessary organiza-
tional function. What we've discovered is that there are people in
cross-skilled teams down at the bottom of the pyramid that can
manage themselves effectively. What's happening is that the
middle of the pyramid is getting crushed. I'd like to focus on what
some of the organizations we're working with are doing in terms
of thinking of how to crush the pyramid and how to reorient
"getting the job done" so as to be more effective in a competitive
marketplace.
There are six C's we talk about that are very important as we
start working with management groups. The first C, for creating a
peak performing organization, is understanding your context. That
is done by asking the questions: What are the possibilities available
to us? What is our marketplace? What is our environment? Who
are our customers? What is the big picture? Does it make sense to
stop being a shipyard and become something else? It's the first
thing that an organization needs to do. It is a reasonable first step
for a management group that begins to think about participative
management and labor-management cooperation.
The second C is clarity. Given a certain context, what are the
options available to us and where do we want to go? There
should be some goal setting in the first step as the management
and labor group meets and starts to talk about the context.
Out of that comes something important which is conviction.
When a certain course of action has been decided upon, all must
agree that it is the right course.
The next thing that is needed is competence. It may be well and
fine to say we want to start a labor-management effort, we want
to move to participative management, but we must find out how
to develop the skills and tools necessary in order to make the
move.
Each of us in our positions has been socialized to do things
pretty much on our own. The skills that we learned involved
being good individual problem-solvers. Thus, one of the tasks that
has to occur with a management group involved in employee
involvement is letting the members of the group in on the action
in terms of how it is that jobs are changing and problem-solving
tasks are changing. That requires tools and abilities.
The fifth C is cooperation. It entails working together as a team
to reach the established goals. The right kinds of tools, either the
technical type or the interpersonal type, enables us to reach those
goals.
The last C is creativity. Problems can arise in this stage if you
don't reward people for coming up with better ideas, or new ideas
for improving performance. Some of you may be familiar with
something called entrepreneurship in organizations, which in-
volves rewarding people for being risk-takers and coming up with
innovative new ideas. Creativity involves this entrepreneurship
principal and the work is in bringing new ideas into the
organization.
Those are the kinds of things that we deal with when we talk
with management groups and begin to prepare them for joint
labor-management cooperation and participative management.
We believe there are some questions that need to be answered as
you move forward with such an effort. They have to deal with
top, middle, and lower management. We've been involved in
efforts that have been termed successes, some which have been
failures, and some which floundered. We've been through different
life cycles with these efforts, be it in the steel, automobile, petro-
chemical, or airline industry. Once you get the effort off the
ground, have some teams working together, and have had some
initial team building and discussions about how to share values
and philosophy, the rubber meets the road. People start asking the
following questions.
Of top management they ask: D o they really know and
understand what's going on down here? D o they buy employee
involvement? Are they committed? D o they show up at the
meetings? Are they participating when they set up task force
meetings? Are they supportive of that kind of effort?
Middle management has a real crisis on its hands with the
pyramid because the pyramid was designed basically for middle
managers to provide technical services or to pass on information.
The roles of middle managers change as you move forward in an
employee involvement effort. There's a move from the role of
boss to the role of coordinator. There's a move from the role of
manager to the role of facilitator.
The "new" organizations, such as People's Express in the airline
industry, and the mini-mills in the steel industry, are figuring out
how to become more flexible. In an environment that's turbulent
and changing, you're going to want a highly flexible organization
that's able to respond quickly and effectively to change. To do
that, you need different kinds of communications. Not only do
you need up and down exchange of important information, but
you also need diagonal and horizontal communications. That's
the role that begins to change for the mid-level manager. They
become conduits of information that flow sideways and to other
task groups as opposed to just the up and down chain of
command.
The four questions important to middle management that
you're going to have to answer are: 1) Is the top really serious, or
is this something we're just going to do in bad times? If we
exchange all the financial information today, will we go back to
the old way of effectively sharing that information when things
turn around? 2) Is this in the organization's best interest? 3) Is it in
my best interest? and 4) Given the move to a new way of
managing the business, how do I go about working differently
with the people in the organization? How do I begin putting
together different kinds of problem-solving groups?
The first line supervisor asks the same questions, but they're a
little more acute, a little closer to home. The supervisors ask:
What is my job? If you have work groups which are semi-
autonomous work teams or autonomous work teams what will
be going on back in the workplace? How is my job any different?
One thing that they have to learn is how to work in teams, which
involves a socialization process which we haven't spent much
time discussing.
A lot of the organizations that have this tall kind of pyramid
did a very effective job of telling people how to manage. What
they didn't teach was how to lead. One of the things that we have
been focusing on as we've worked with different industries is not
only how you manage, but how you lead a group, how you lead a
team, what skills are required.
That's a brief overview. Now I would like to talk about the
approaches we've taken and the things we are learning. One of
the first efforts that I was involved in, outside of the military and
outside of Shell, was with an organization called Cameron Iron
Works. They make oilfield equipment. They were doing a
booming business at the time but they recognized that they had to
become better managers. They felt that the union wasn't interested
in joint effort, so the approach they decided on was management
training. They selectively pulled people in from different areas
and conducted the training. That's one approach.
The second approach is an approach that we've taken at
Eastern Airlines with the support of the four unions. It involves
joint activity and changes in the management group there. 'That
approach started with the CEO/COO saying, "This is good stuff,
but do we need to do it?" They encouraged interested mana.gers
to go ahead and do team building and to learn the skills involved.
Thus what we had were selective groups. It was more of a
management volunteer process at the executive level, cascading
down.
Western Airlines worked from a different set of criteria. The
guy on top said, "We're all gonna do it. We're gonna start with
me and my group and we'll work down. We're going to focus on
one part of the organization and take it all the way down to get
ready for the joint labor-management start-up in the spring. Vde'll
do that, by training all of the managers in that particular
department." But the training isn't what's important. You really
create an opportunity where people get to think about their jobs
differently, learn some new skills. and have those new skills
continually reinforced back on the job. What we've learned is
that you're most effective if you take a group of managers that
traditionally work together, all out together for training as opposed
to taking just one or two. That's an approach that we've taken
there.
One of the key issues in working with management groups is
the notion of flexibility. What we've discovered is that in every
case, although we know that there's a generic set of sikills
associated with being a more effective manager and leader, there
is the need for customization. It's very much like the Beaumont
case study this morning where they did an organizational diagno-
sis, listed the key issues for that organization, and then decided
that they were not only going to work with the management
immediately, but were going to work on some other issue:<as
well. Every activity in the participative management training arena
must be customized to your organization and its culture. Acl.ion
research seems to be the most effective way to start. By aciion
research I mean going in and finding out what's going on, meeting
with people, and then, if you have a clear picture, developir~ga
strategy with the internal group that's going to manage the
participation program.
Does all that make sense? What I've tried to do is reinforce
some of the key points that were made earlier today. The world is
changing. There's a revolution going on and as we used to say in
the military. "Lead, follow, or get out of the way." The revolution
is here in terms of how we manage ourselves. The management
function is shifting. The question is, are you able to change East
enough not to be a dinosaur? You really can choose only two of
the following three choices as you move forward with any effisrt:
FAST, CHEAP, or GOOD. As you think through ways in which
to manage your business differently, you will be confronted with
the question of how to reinforce and train those people involved
in it in such a way that's G O O D and FAST, but not CHEAP. By
that I don't mean cheap in terms of money as much as I mean
cheap in terms of time, energy and effort. You can have FAST
and CHEAP, but it won't be G O O D because it won't be
reinforced. So, as you think through how you may want to move
forward in each of your individual areas with an employee
involvement effort, think about the trade-offs that might be
presented to you.
Jess Christman is going to talk about the scope of activities that
build on this issue of management - from labor-management
cooperation, autonomous or semi-autonomous work teams,
LMPTs, efforts that are pretty focused and localized in some
cases, to what must happen simultaneously with management to
support an employee involvement effort.
Jess Christman I want to make one clarification befor: I
begin. Earlier this morning I heard someone ask, "What does
de-skilling the work force mean?" worked four and a half years
for General Motors building Cadillacs for wealthy shipbuilding
executives and a few union leaders. I put in 42 brake pedals an
hour, 168 before lunch, 168 after lunch, year after year. I was an
expert; I was skilled. But it was so narrow. That is what is called
de-skilling the work force - narrowing the skill to such a point
that people simply can't use the intelligence God gave them.
What I'd like to do now is talk to you briefly about types of
efforts that fit under some of the general headings that we've been
talking about. In the first place, there are programs. In the second
place, there are efforts to influence organizational arrangements.
The third set of activities involves structural change or
organizational redesign efforts. The fourth deals with redistribution
of power and influence. I would like to talk about each of them in
turn. Quality circles are programs. Problem-solving teams, as you
develop them in your plants and organizations, tend to be
programs. Employee involvement teams, another word for the
same thing, are programs. Labor-Management Participation
Teams (LMPT's), as John was describing, if taken just by
themselves, are programs. They are typically bottom-up efforts-
beliefs that you can make water run uphill, that you can move
from the bottom up. I don't think it works. I don't think you can
get to the organizational change involving fundamentally new
ways of living together if all you do is implement LMPT's or other
programs. I think they may be important and valuable as parts
and pieces of a change effort, but by themselves they'll never
make it. I say that because I have spent a lot of time and energy
helping to start LMPT's, problem-solving teams, employee
participation groups and the like.
Second are efforts to influence organizational arrangements. At
that point, I think it has become clear that we are talking about
generic categories: employee involvement, quality of work life,
participative management, and Labor-Management Participation
(LMP). Lately I've been spending a fair amount of time with
Bethlehem Steel talking to a number of people in a number of
plants, and what's interesting is that increasingly they don't talk
LMPT any more. They talk LMP, in whatever form that may
take. That these items, employee involvement, quality of work
life, participative management - whatever you wish to call it
-are generic categories aimed at influencing organizational
arrangements is an important dimension that we need to look at
and be aware of. They are not simply programs that tend to come
and go depending upon the commitment and the interest of the
management organization.
Structural change and organizational redesign take it a step
further. Here we are talking about things that get into the very
nature and form of the organization and shape it, Once you move
in those directions it's going to be hard to back off. Gainsharing is
certainly one key piece. Questions arise as to what happens to the
money that LMPT's save. One of the answers is that in an
organization that's moving towards employee involvement, the
money gets shared in some form. It may be a Scanlon plan, a
Rucker plan, Improshare, profit sharing, or a whole series of
schemes. But somehow it's saying, "Yes, everybody deserves a
share of what is saved by whatever kind of participative effort we
get into." Once you get into gainsharing, it is not easy to change
and back off from it. Interestingly, gainsharing consultants have
lately found that business is improving. The reason is that
companies are beginning to make money. They're beginning to
find that there is money to share. Starting a gainsharing program
where there is no money to share isn't a very super strategy.
Next, I would like to talk about self-directing work teams. W e
have heard about autonomous work teams. We have heard about
leaderless work teams and self-managing work teams. In any
case, we have heard about groups of persons who come together
to manage their own business. This reminds me of a foreman I
knew at a foundry in Ohio run by General Motors, who said at
the end of one of these types of speeches, "You mean to tell me
that you want me to ask my people what to do? Hell, I tell them
what to do and I've been doing it for 40 years." That's precisely
the point. As long as people are viewed as folks who need to be
told, we are in a different type of mode. When we begin to say,
let's have self-directing work teams, let's let people manage their
own work life, then we are structurally changing the business.
We have been talking about the supervisor feeling threatened.
He or she ought to feel threatened. Supervisors' jobs aren't long
for this world the way they're currently set up. W e simply do not
need as many supervisors as we have in most of our manufacturing
and production organizations. They are doing work that people
can do and manage themselves. As we get fewer levels of
management we begin to cut down the management work force
as well as the hourly work force, we begin to get more effective-
ness in the organization. W e are structurally changing and
redesigning the management system as we go. For those
supervisors who remain, there are fundamentally new roles.
Instead of being instruction givers and order givers, supervisors
become people, consultants to their workers, people who manage
the boundaries. Their whole job begins to change and that's a
critical structural change to manage. Finally, let me stress that
both of these strategies are both bottom up and top down. We
need to do the kinds of things that I've listed under these programs,
but if we do them in concert with efforts to change the structure,
efforts to redesign the system, i.e., working from the bottom and
the top, then we have a chance for success.
Finally, I would like to discuss the whole issue of redistributing
power and influence in the organization. At this point we're fairly
far out on the fringe. We have seen employee stock option plans
used to buy out the companies. Weirton Steel did that in Weirton,
West Viginia, the Rath Packing Company did that in Waterloo,
Iowa, and other companies have done it. There is some question
as to why anyone would want to sell a company to the employees
if the company was making money. The answer is they don't.
Caution must be taken when employees are offered the oppor-
tunity to buy the companies within which they work. Union-
worker representation on boards of directors is beginning to
happen. Randy was talking about Eastern Airlines and Western
Airlines. There are several other companies beginning to see
employees showing up at the board of directors meetings and
saying, "Hi, boss, I'm here, and I'm your boss." There is some
fundamental redistribution of power and influence in that whole
process.
The four categories I have described may or may not involve
joint union-management efforts. Any one or all of them can
involve the union in a joint fashion, or they may not, depending
on the circumstances. I believe that if you have a union present
but you don't involve it in these processes, you aren't going to get
very far. Sooner or later that union is going to undermine you and
pull the rug out from under you. What we believe as a consulting
group is that if you've got unions, you have to fundamentally buy
them in on the process right at the beginning and the process has
to be a joint and equal effort all the way through. It's very hard
for managers to give up that power and it's very hard for union
people to take that power because for both union and manage-
ment, changing roles is a difficult process.
Discussion
Unknown I guess many organizations view problem-solving
teams as sort of a buffer before they get into the heavier types of
employee involvement and organizational redesign. Some
companies feel comfortable going slow while others wish they
would have gone faster. My question is, does the speed at which
an organization pursues employee involvement and reorganization
depend mainly on its financial condition?
Randy Duke It not only depends on the company's financial
position, but also on what the company is trying to accomplish
and where it is trying to go. The company must weigh the trade-
offs involved. Companies try to do the best they can with what
they have. What we have learned is that union and management
groups must first commit to being committed. As they go through
the process, they are able to accelerate and that is one of the
functions of that buffer, getting some experience with the teams
which allows them to move.
Bill Batt I am anxious to hear from John Eck. He has had a
lot of experience with the LMPT's at Lebanon, and Lebanon is
cited by the Steelworkers' Union and by the industry as one of the
best cases in the industry. Could you give us an example of one or
two of the accomplishments or the mistakes made at Lebanon?
John Eck We had 13 labor-management participation teams
in the same or related work areas. W e had two salary teams, one
from sales and one from the materials management department.
We had one multi-million-dollar team which was a cross-section
of employees from throughout the organization that was specifi-
cally put together to look at customer service and how it could be
enhanced. The effort lasted for three and a half years. There were
some good things that happened but they are difficult to quantify.
It is not the type of process that can be looked at quantitatively. If
the view of the process were to be focused on quantitative
measures, I don't believe that the effort can be seen as successful.
To me, this kind of process should be looked at qualitatively
because of the types of things that are dealt with. People are
involved, and that's very important to keep in mind.
Many people have used different types of measures, mostly
quantitative for this kind of process. In Lebanon, some of the
teams have saved anywhere from $250,000 a year to $400,000 a
year, but we should also look at the other side of the coin. We
should look at absenteeism, attitudes and how these impact on
productivity, however you define productivity.
To latch on to the process at Lebanon and to measure it
quantitatively is very difficult. One example of this appeared in
the corporate publication called the Bethlehem Review.It involved
a team in our number one area. They had a situation that dealt
with a heater and an operator. The team saw a need for more
incentive on both jobs. Quality was suffering, customer service
was lacking and attitudes were at rock bottom. The team that
initially attacked this perceived problem of incentive rates found
out that it wasn't the lack of incentives that was screwing the
work up, it was the way the jobs were designed. The heater was
being paid six points and the operator was being paid ten points.
We were expecting the guy who was being paid six to look at the
job the way the guy who was being paid ten was looking at it.
That just doesn't happen. The group looked at this problem and
after meeting two hours per week for roughly 38 weeks they
came up with a solution. Their solution was a level-handed
operation. Instead of having a ten point/six point system, they
recommended a ten pointhen point. With this system, the
operator and the heater would spell each other. One would heat
and the other would operate the machines. When it came time to
make repairs on the machines, you can bet your bottom dollar
they both worked on the machines due to the fact that they were
both being paid ten points. With the old system, the guy that was
paid ten points had to be there because it was a part of his job
description; the six point guy didn't.
The real bottom line of the level-handed operation was savlngs,
which were astronomical. The quality of the products increased
somewhere around 45 to 46 percent. The down-time based on
machine repairs was reduced by 28 to 32 percent. The attitudes
changed because the jobs were on the same level, and this change
resulted in an increase in productivity.
A sales group I was working with was heavily into the
redesigning of their inside sales force. This was another thing that
proved to be very effective and efficient, but it was too little too
late.
Ed Connolley Bethlehem has remained the last major aup-
plier of industrial fasteners since 1972. Although the company
has been in a survival mode since that time, it only started doing
something three years ago. Would you please comment on that?
John Eck In terms of effort, one of the things that impresses
me not only at Bethlehem Steel Corporation but at other
corporations as well is that there is so much that happens
informally that goes unnoticed. Unless you are on top of it, you
don't see it, you don't recognize it, and it goes right past you. This
informal type of union-management collaboration has been
happening at Bethlehem for a long, long time. It has b~een
submerged for so long but now it is starting to rise and become
more recognizable.
John Bunch Without asking a pointed question, why have
your teams not met for a year and a half?
John Eck The first reason deals with concessions, both on
the corporation level and on the plant level. Another factor ,was
the external environment. We were terribly affected by the
economy. We watched our market for products go down as the
economy declined. This external factor had impacts on our
internal environment. We had extreme fluctuations in work force
size due to attrition. The teams were in the depressed areas of the
plant, so as the work in these areas went down, so did the teams'
work. There used to be ten to twelve members on a team, but
with the decline in demand, the teams fell to three or f13ur
members. The concessions and the fluctuating work force were
the basic reasons for the teams breaking up.
 British Shipbuilders Govan Shipbuilders Inc.
Case Study #3
Donald Macphail
Michael Gaffney Donald Macphail is Planning Manager at Govan
Shipbuilders, responsible for central planning, production planning and
control. He is also a naval architect, and lectures in this subject at Paisley
Technical College.
INTRODUCTION
This paper is presented from a Govan Shipbuilders viewpoint,
but it is believed that it reflects events in most U.K. shipyards
whether British Shipbuilders subsidiaries or not.
BRITISH SHIPBUILDERS
The nationalised corporation was established in July 1977.
The current organisation comprises four main production
divisions, namely:
-Merchant Shipbuilding and Composite Division
This includes engine building, offshore construction and
shipyards building both merchant and naval ships
-Warshipbuilding Division
-General Engineering Sector
-Shiprepair Sector
GOVAN SHIPBUILDERS
Govan Shipbuilders is part of the Merchant Shipbuilding
Division of British Shipbuilders.
The Shipyard is located on the south bank of the river Clyde
about 3 m&s from the centre of Glasgow. It has a history dating
back to 1860 and for most of its existence was known as the
Fairfield Shipbuilding and Engineering Company.
Govan Shipbuilders was established in 1972 and the facilities
were substantially modernised between then and 1976.
The current labour force stands at 2200, although the normal
budgeted level is 2600.
INDUSTRIAL RELATIONS NEGOTIATIONS
Industry negotiations are conducted at a national level by H.Q.
Industrial Relations staff with representatives in attendance from
subsidiaries including local shop stewards and Industrial Relations
Directors. Major negotiations take place annually.
Govan Shipbuilders - Industrial Relations
Negotiations at subsidiaries are within the framework of the
National Agreement and deal with local problems and the
practical interpretation of national agreements at local levels.
At Govan, negotiations are handled on the employee side by
four main inter-union negotiating groups, namely:
-All hourly-paid employees
and staff
-Supervision and junior management
--Senior management
If necessary, trade union delegates may be involved and final
appeal handled at the National level.
Events Leading To Phase 5/Enabling Agreement
The world-wide recession in the shipping and shipbuilding
industry has led to shipyard closures and overall contraction of
the industry in the U.K. as elsewhere. This has enforced on those
employed within the industry the recognition of the need for
radical measures for survival. This need was recognised by
management and labour alike. In the U.K. an action plan was
prepared for the complete review of methods and procedures
used in the industry and the adoption of the best available methods
and technology.
For the action plan to succeed it was recognised that there was
a need for an overhaul of existing labour practices and
demarcations so that the most effective use could be made of new
technology and methods. To this end, the views of senior
management from each subsidiary were sought regarding the
changes in labour practices which were most desirable. From the
responses was distilled a list which formed the basis of negotiations
from which the Enabling Agreement was derived.
THE NATIONAL AGREEMENT
The National Agreement applies to all employees of British
Shipbuilders and its wholly-owned subsidiaries. The key feature
of the Phase 5 National Agreement is the Enabling Agreement
and is detailed below. This agreement provides for a weekly
guaranteed payment equivalent to 75% of normal 39-hour
earnings during periods of temporary lay-off caused by un-
availability of work. The Agreement also provides for enhanced
benefits for manual workers for absences from work due to
sickness or injury at work. All employees are granted an increase
payable on acceptance of the Enabling Agreement. This is a flat
rate for all adult employees. The Agreement provides for the
continuation of existing payment systems and conditions and
allows for the operation of local agreements except where
superseded by the Phase 5 Agreement.
THE ENABLING AGREEMENT
The Enabling Agreement to revise working practices was
concluded between British Shipbuilders and the Shipbuilding
Trade Union Negotiating Committee in the recognition that
changes in methods and working practices were essential to enable
the industry to significantly improve its performance and
productivity and hence competitiveness when tendering for new
orders. It was also intended to provide an opportunity for
enhanced earnings for all employees through implementation of
the agreement.
The principal features of the Enabling Agreement are:
1) Interchangeability
This allows a craftsman with one set of core skills to work
alongside another with a different set of core skills on a temporary
basis to smooth the demand for labour.
2) Flexibility
This allows a craftsman after suitable training to get on with his
job without having to seek assistance from another trade, thereby
avoiding hold-ups in his own job.
3) Integration
In trades with a substantial overlap in their core skills, e.g.
shipwright/plater or coppersmith/plumber, after suitable training
each will be able to operate the full range of the total of those core
skills, becoming, in other words, an integrated steelworker or
integrated pipeworker. Integration leads to continuous flexibility
within the groups.
4) Composite Groups
Composite groups are groups of 2 or more trades. The number
and ratio of the trades in the groups is taken in relation to the
target man-hours for the tasks to be carried out, within which
there will be interchangeability and flexibility. The members of
the group will in the main use their own core skills until their task
is held up or until another trade requires support to complete
their task.
5) Ancillary Workers
Ancillary workers will be fully interchangeable within the
ancillary groups as required.
6) Staff Employees
Staff employees are used where their knowledge and experience
are most effective and can be interchangeable as required, again
according to individual skills and experience.
7) Area Supervision
Area supervision is operated with full acceptance by both
hourly-paid employees and staff, and in the case of multi-trade
manning, e.g. composite groups, the supervisor or supervisors are
normally selected on the basis of the trade composition of the
group.
8) Balanced Labour Force
The Agreement provides for the balancing of shortages and
surpluses of manpower with the requirements of the workload by
using surplus trades to supplement trades with a shortfall in labour
subject to available skills and experience, i.e, interchangeability.
This is subject to consultation.
9) New Methods Equipment And Systems
For the introduction and operation of all new methods
equipment and systems, the following approach applies:
a) Initial consultation, particularly in the areas of health, safety
and training.
b) Joint agreement on the most efficient method of working.
The newly agreed manning scales and methods are then
operated.
c) In the event of disagreements these shall be taken th~ough
procedure. In the meantime, the new system will be operated.
10) Shift Working
The Agreement provides for shift working when necessaxy to
improve efficiency, or to maintain or recover delivery dates. When
the need arises at Govan, discussions take place to conclude
sensible and efficient arrangements.
11) Adoption Of The Best Working Practices Throughout The
Industry
Supplementary to the Enabling Agreement and as a result of
discussions between subsidiaries, a small number of exi~sting
practices were identified at other shipyards whose adoption offered
scope for performance improvement. These were adopte:d at
Govan coincidental with the enabling agreement. Similarly,
certain existing Govan practices were available for adoption
elsewhere.
12) Associated Training And General
To ensure the full implementation of the terms of the
Agreement, it was recognised that training or retraining would be
an essential element.
The importance of covering all aspects of safe working practices
and health protection in the implementation of the Agreement is
recognised as a prime concern.
13) Operation Of New Practices At All Times
The practices covered by the Enabling Agreement, including
overtime and shift working, apply throughout the Company ;it all
times. In the event of change being sought by either management
or unions, the practices established under the Agreement continue
to be operated while the matter is being pursued through
procedure.
PREPARING FOR IMPLEMENTATION
COMMUNICATIONS BRIEFING TO ENTIRE LABOl'JR
FORCE
Immediately following the signing of the Enabling Agreement
the Company embarked on a project of communications to all
employees.
Aim
To ensure that all managers, supervisors, shop stewards and
hourly-paid workers were aware of and understood the Agree-
ment, its importance to the Company in terms of productiivity
gains, and the need for the Company to support the Agreement
by ensuring the right materials and information are provided at
the right place and the right time.
Method
It was decided to use a cascade briefing technique employing a
standard brief for all levels, accompanied by a video entitled "the
Need for Change."
The project was divided into three main stages beginnin,g in
early March, 1984.
First Stage
Prepare and agree on the form and content of the standard
brief and method of presentation.
Train senior managers in briefing techniques, using them to test
and refine the brief and at the same time creating the discipline to
absorb the Agreement.
 This stage was completed by the end of March 1984.
Note: The brief was a detailed explanation of the Agreement
supported by practical examples and by overhead projector slides.
Second Stage
The senior managers were used to brief departmental managers
and senior staff.
Briefing training was continued for departmental and super-
visory levels to enable them to participate in Stage 3. By using
this approach the senior managers and staff had to understand the
Agreement before confronting their subordinates.
Stage 2 was completed by the end of April 1984.
Simultaneously a tape/slide presentation of "the Need for
Change" was prepared.
Third Stage
"Need for Change" was approved by directors and a video
was created.
Presentation of briefings to all remaining staff and to all
hourly-paid workers was accompanied by a showing of "Need
for Change."
This third stage was completed by early July 1984, by which
time all employees had been briefed.
Format of Briefings
Each briefing session was of approximately 90 minutes'
duration, comprising 20 minutes for the video followed by 10
minutes for questions, then 30 minutes for the brief plus 30
minutes for questions.
Groups were confined to approximately 40 in number and
wherever possible to departments.
Briefings to hourly-paid workers were by departmental
managers supported by an assistant manager or foreman. A
member of the training department was present at each briefing
for support and to ensure consistency of presentation.
TRAINING PROGRAMME
A) Assessment of Training Needs
Four distinct classes were identified as having different kinds
of training needs, with further sub-divisions within each class.
The four major classes were:
-Tradesmen
-Ancillary Workers
-Supervision/Management
-Staff
1. Tradesmen
These may be divided broadly into steelwork and outfitting
trades:
For steelwork there were three objectives:
a) Production welders should be trained to perform local
fairing, arc-air gouging and grinding in addition to the full
range of welding skills.
b) Other capable steelworkers should be trained and be able
to plate, fair, cut, grind and carry out simple welding.
c) A number of steelworkers should be trained in specialised
functions such as N.C. Machine operation, plate forming and
heat line bending.
Outfit workers perform more diverse roles but the following
are examples of identified extension of skills training:
Joiners:
-Tack welding, drilling and tapping metal fixings and use of
Hilti nail gun.
Pipeworkers:
-Welding (to ship's structure except in way of watertight
bulkheads), burning, sheet metal tray work.
Electricians:
-Welding of fittings, sheet metal tray work, painting of
equipment.
Fitter:
-Small bore pipe bending and brazing; welding, burning
and sheet metal work for hangers and trays.
2. Ancillary Workers
These comprise helper and labourer classes.
Training is being provided in crane and vehicle driving,
temporary lighting, provision of ventilation and assisting
launch way squads.
This area provides the greatest challenge as supervisors are
required to control composite and/or integrated groups
containing personnel with trade skills different from their
own basic training. Courses for supervisors are therefore
designed to give them an understanding of the basic core
skills of the trades they are most likely to supervise in the
work environment. However, the main purpose of supervisor
training is to make them aware of the need to improve and
change the nature of the industry and to have a better under-
standing of the changes in training and the techniques
involved. Emphasis is placed on the particular role of the
supervisor in the requirements of his job and his relationship
with others including human relations and communications.
He is introduced to the technological systems and methods
changes being implemented.
Finally, he is given an insight into the role of other
departments such as:
-Drawing Offices
-Planning and Production Control
-Design and Estimation
-Quality Assurance
4. Staff
To date, most staff training has been of a specialist nature
dealing with technological change, e.g, the introduction of
CAD/CAM and on-line computer technology.
Introduction of new systems and procedures are also the
subject of specific training.
5. General
The aspects of health and safety at work and the
introduction to change are prime aspects of training for all
classes of employees.
B) Implementing the Training Programs
Training programs devised covered both off-the-job courses
at the training school and on-the-job training. Training of
tradesmen on new core skills was relatively easy using the
 facilities available and taking advantage of a gap in the
production program. Training of steelwork tradesmen is
virtually complete, having been accomplished during the
period of lay-offs between March and August of 1984,Similar
advantage has been taken of the slightly later period of lay-offs
for outfitting and ancillary workers. Training on the job
follows immediately after training school courses and is well
underway, with anticipated completion by the end of the
year.
IT SHOULD BE NOTED THAT TRAINING O F IN-
DIVIDUALS WAS SYNCHRONISED WITH THE CO-
MPANY'S NEEDS AT THE TIME, AND PLANS FOR
THE FUTURE COMPOSITION O F GROUPS.
Training programmes have been finalised for supervisory
staff and commence in early December. Release of staff is
more difficult, especially with an increasing work load, and
most courses include an element of week-end working.
A training audit is carried out 6 months after on-the-job
training commences.
C) Recording and Applying the Results of Training
A record is maintained for each individual of all courses
attended and of on-the-job training, with a record of pass or
failure. It has been proposed that each foreman be provided
with statistics for each member of his group showing their
basic and extended skills so that these can be employed to
maximum advantage.
ORGANISATIONAL CHANGE-LABOUR
GROUPS
NEW TECHNOLOGY
The philosophy of product work breakdown structure has been
adopted by Govan Shipbuilders and many other U.K. ship-
builders. This has further emphasised the concepts of moduling
and advanced outfitting which were introduced at Govan over 10
years ago.
Sufficient information has already been published on product
work breakdown structure. However, the introduction of group
technology and process flow lines for part families involving
clearly identifiable work stations has highlighted the need for
groups of different skills operating at the same location under one
supervisor.
This concept is extended to on-board working by clear
identification of ship zones where work is of a similar nature, e.g.
accommodation.
NOT ALL EMPLOYEES ARE GROUPED
It must be recognised that the different shipbuilding trades
have not all developed by accident and that there is still a need for
specialised skills. The aim of the Enabling Agreement was to
break down some of the rigid demarcation barriers which were
both outdated and unsuited to the efficient operation of up-to-date
technology.
It therefore follows that those employees who perform a distinct
or specialist function will not be incorporated in composite
groups.
Examples are:
Manufacturing areas such as:
-Pipe shop
-Machine shop
-Joiners shop
-Sheet iron shop
-Painting, etc.
On Board:
-Specialist installation
-Commissioning and testing
COMPOSITE GROUPS
As previously defined, composite groups are formed from two
or more trades.
Examples of composite squad working areas are:
-Cabin module manufacture (established prior to Enabsling
Agreement)
-Outfit/machinery module construction
-Advanced outfitting
-On-board zone outfitting
This list is not exhaustive. It will be noted that compc~site
squads are predominantly but not exclusively related to outfitting.
The composition of a composite squad is determined by
evaluating the work content by trade to complete the overall task.
Where the work content for any particular trade is minimal, that
is, amounting to a fraction of a man-week, then that trade will not
be included in the group. In this event the work will be covered
by a suitably qualified person.
For example, if this involves a member of the Boilermakers'
Society in the steelwork department, a member of the Boiler-
makers' Society in another department (sheet iron worker) will
cover for that work content. However, if an outfit tradesman
requires burning or welding assistance and the sheet iron worker
at that particular time is fully occupied, the outfit tradesman (can
progress on his own job by providing the service himself. Hence
the term flexibility. This is best illustrated by reference to the
following example of an outfit composite group.
The potential savings is only based on the use of minimal
manning input, but there are further gains available from the
reduction of waiting time and from flexibility within the group.
Where composite groups are employed in a manufacturing
flow line situation, it is important to balance the group to the
average requirements of the work flowing through the work
station and to maintain a steady group composition.
INTEGRATED GROUPS
There are two areas where integration will operate:
It will be understood that in the U.K. generally, and at Govan
in particular, the term steelworker includes:
-Platers
and is expanded under the general term boilermaker to include:
 -Sheet iron workers
-Boilermakers (engineering steelworkers)
It is our aim to establish two fully integrated steelwork group
types comprising:
Fabricators:
Responsible for fabrication assembly and ship construction.
This group includes platers, shipwrights, caulker/burners,
drillers, helpers and welders - for functions where for safety
reasons plater/shipwrights are not permitted to weld.
Welders:
For all main structural welding. The group will include some
caulker/burners.
After full skill training and on-the-job experience, there will be
complete interchangeability within these groups, leading to full
integration.
Govan has enjoyed complete integration of plumbers and
coppersmiths since 1963; they are now indistinguishable and class-
ified as pipeworkers. This simplified management's problems in
the allocation of labour for both installation and manufacture and
the avoidance of duplicating facilities, all contributing to increased
productivity and reduced costs which are now amongst the lowest
in U.K. shipbuilding.
AREA SUPERVISION
Currently Govan is establishing area supervision related to
control of work at work stations in shop or "on-ground" locations
and on board ship for work in identified zones.
As indicated above, the choice is largely governed by the mix
of skills in the groups supervised subject to the availability of
suitably qualified supervisors.
In shops it is considered that a foreman should be responsible
for a maximum of two station groups, while on board ship this
will be restricted to one group wherever possible. Ideally each
group should not exceed 15 men.
Consideration has been given to the adoption of primary zone
management organisation. The primary zones identified as the
basis of this organisation are:
-Hull and deck
-Machinery spaces
-Overall electrical installation
Adoption of this policy would involve the reorganisation of
design and production so that all work associated with each zone
is the responsibility of one design manager and one production
manager, thus leading to reduced interface problems and simpli-
fied communications.
This policy would also conform to the basic principles of group
technology.
IMPACT ON TECHNICAL/SERVICE
FUNCTIONS
COMBINED IMPACT OF NEW TECHNOLOGY PLUS
NEW WORK ORGANISATION
The impact on pre-production and service departments of
introducing new technology, new methods, new systems and new
work organisation simultaneously should not be underestimated.
We are attempting to compress into a short time-span what some
of our competitors have been steadily developing over a number
of years. This problem is exacerbated by the need to keep costs
and overhead down in times of lean order books because
additional costs are undoubtedly incurred during the development
and initial implementation period. In many cases small shipyards
just do not have the necessary resources or expertise to develop
and implement the changes required.
However, from personal experience it has been observed that
small shipyards generally have less inertial resistance to change
and that is to their advantage because a small team can create a
much greater impact through shorter lines of communication.
Areas other than direct production which are affected by the
changes are as follows:
PRODUCTION ENGINEERING
The method of build must be established at an early stage so
that the detailed production drawings are developed to suit
production requirements.
Thus product engineering has two main objectives:
-To identify major manufacturing or production problems
and to find a solution.
-To break down the ship into products which permit the
most effective use of facilities and labour organisation.
Inherent in this process is the aim of maximising advanced
outfitting (pre-outfitting) and moduling which has been practised
to some degree at Govan for over 10 years but which is being
substantially extended.
It is our aim, for pre-outfitting and for pre-planned pipe
manufacture, to apply zone outfitting and in the process separate
the activities of steel and outfit whenever possible. The eventual
aim is to achieve a pre-outfit level in the region of 80%-90% by
weight and a pre-planned pipe level of 90%. We have evidence
that this is being achieved in Japanese yards.
The general approach to product engineering for pre-outfitting
is as follows
1) Apply all work downhand where possible.
2) The larger the unit, the less the interface.
3) Maximize outfit on both sides of flats.
4) Reduced number of made to place pipework.
5) Reduced staging.
6) All lifts are direct.
7) Working tools are readily available.
8) Work is taken to worker.
9) Job is easier to organize and plan.
10) Better quality.
11) Easier to supervise and control labor.
12) Erection on berth is speeded up.
Essential to all of the above, is the accuracy of steelwork and
pipework.
TECHNICAL - DRAWING OFFICES
The drawing office must work within the parameters set by
Production Engineering and produce drawings suitable for the
product work breakdown structure.
This calls for work station or zone composite drawings
containing all the information required at a particular work station
or zone - but only the information required to complete the task
at the work station.
The introduction of CAD/CAM facilitates the production of
work station composites by using an overlay method of drawing
creation.
Advanced outfitting and moduling requires the issue of
information and procurement of outfitting materials at a
significantly earlier stage in the building process, and this imposes
considerable pressure on design and drawing offices by reducing
lead durations in times of short order books. To alleviate this
problem there must be increased use of standards whose adoption
provides further benefits in other areas of the Company.
1) Encourage design simplification.
2) Eliminate repetitive chores.
3) More time to address production problems.
4) Cost benefits.
5) They must be continually developed and maintained.
6) Reduce freedom to follow individual whims.
7) Familiarity is gained in manufacture and assembly.
8) Leads to better scheduling and leveling of the work load.
9) Batch manufacture saving in man hours.
10) "Buying in" or "in house" manufacture practical option.
It cannot be sufficiently emphasised that the success or failure
of new working methods is very dependent on the influence of
the design departments.
Govan has adopted the motto:
"CHANGE BY D E S I G N
PRODUCTION PLANNING AND CONTROL
The new technology and working arrangements require
significant changes in production planning and control. Among
them is the formulation of a build strategy document in
conjunction with Production Engineering and Production
Departments. This document specifies how the ship will be
constructed and contains the overall program for its achievement.
A preliminary version is developed pre-contract and expanded
early post-contract as fuller technical details become available.
At the work-face level weekly schedules must be produced for
each work station. Each schedule must contain manning levels
for establishing labor group composition based on work content
estimation and duration. In the case of shop manufacturing work
stations, the content of the work schedule must match the
composition of established groups.
The definition of the product structure and adoption of "part
families" (group technology) helps to simplify the task.
MATERIALS ORGANISATION
It is of paramount importance that the right materials are
delivered to the right point at the right time to provide the labour
groups with the necessary materials (and information from
drawing offices and production control) to permit effective
working.
Parts lists are prepared in the drawing office and are in the
process of computeriza.tion. This will permit monitoring right
down the line.
Features of material organisation are as follows:
1) Palletize.
2) Eliminate work preparation.
3) Pallet required date dictates the manufacturing sequence.
4) Pallet allocated with estimated work content.
5) Total work content in a unit is the summation of number of
pallets.
6) Accurate monitor for assessing physical progress.
7) Accurate means of forecasting.
ACCURACY CONTROL = QUALITY CONTROL
The new procedures will be supported by more stringent
accuracy control and quality control.
Standards have been set and control documentation designed
for use by operators in self-checking at each stage of the steelwork
manufacturing process. This will be extended to all relevant areas
of the Company's operation. For example, reference grid lines are
used on outfit module construction and detailed on drawings.
The objective is to reduce the amount of "green" ("proud")
material to be cut off at later stages of construction and hence
eliminate additional work content.
LABOUR COST CONTROL
Labour cost control must be reviewed to match the require-
ments of the new work organisation. Traditionally, this is by
trade, department and contract, but must be adjusted to provide
control information at the work station and labour group levels.
ESTIMATING
Traditionally, estimating is based on historical cost returns with
a minor amount of analytical input.
The new work arrangements will result in labour costing by
work stations and labour groups and eventually produce a base
for better estimating.
The main problem lies in the transition period, and provision
must be made to provide suitable returns to the estimating
department during this period.
CONSULTATION & COMMUNICATIONS
CONSULTATION PRIOR TO IMPLEMENTATION
The Agreement specifies that there should be consultation
before the implementation of new methods, new equipment, new
systems or new procedures.
Consultation is interpreted as a communication, not a
negotiation.
It is mutually accepted that change is essential but where there
is disagreement the new method or procedure will prevail and be
operated.
GOVAN HISTORY OF JOINT MONITORING
It has been Govan practice for over 10 years to monitor
contract progress and discuss related production, technical or
personnel problems and their solution. This practice was
associated initially with the introduction of the Company
Incentive Scheme.
Again, it should be noted that these monitoring meetings are
not a negotiating forum; any problems requiring negotiation are
dealt with through normal industrial relations procedures.
Monitoring meetings consisting of management, supervisors
and shop stewards take place weekly or fortnightly at depart-
mental level, while the Company Overall Monitoring Cornmittel:
meets at 4 to 6-week intervals.
COMMUNICATIONS STRUCTURE
To reinforce the Agreement and improve Company communi-
cations in an era of change, a formal communications structure
has been devised. This takes the form of Cascade Team Briefings
throughout the Company at regular intervals.
The initial training program has just been completed prepara-
tory to the introduction of the briefing system. The principal
features of the communication system are as follows:
a) Cascade Briefing
The Company content of each brief is passed down the
management structure, with each briefer required to agree to
the content and format of his brief with his superior. This
comes down from managing director to foreman level.
b) Briefing Groups
Briefing groups will comprise not more than 20 persons and
will be briefed by their immediate superior.
Where a supervisor is responsible for more than 20 persons,
the briefing will be carried out in two sessions.
c) Regular Intervals
The briefings will be carried out at regular predetermined
intervals not exceeding 6 weeks.
d) Pertinent Content
The content of each brief will be at a level suitable to the level
of the briefing. However, major Company content will be of a
standard content and format for all levels.
It is anticipated that about 30% of each brief will be Company
content and 70%local content.
The theme of each brief will fall into four distinct areas:
-PROGRESS: against targets, performance, quality.
-POLICY: explaining or re-emphasising procedures, policies
or decisions affecting the team.
-PEOPLE: new appointments, personnel problems, etc.
-POINTS FOR ACTION: priorities for the next few weeks.
AIM OF THE TEAM BRIEFINGS
a) To keep the work force informed as to all that affects them
within the Company.
b) To set the scene for change.
c) To encourage two-way communication.
Although the briefing is neither of a consultative nor
negotiative character it is anticipated that feedback will be
provided.
d) To strengthen the role of the supervisor, which has tended to
be undermined by the proliferation of specialist functions and
industrial relations legislation.
e) To kill the "grapevine" and stifle rumors before they
undermine morale.
ANTICIPATED BENEFITS
It is expected that the following benefits will be realized through
the implementation of the Enabling Agreement:
1) Improved performance and competitiveness resulting in new
contracts.
2) Increased job satisfaction.
3) Increased earnings for all employees.
4) Increased job security.
5) Provisions for job stability in times of recession.
-transfer between departments (interchangeability)
-transfer between subsidiaries (mobility)
-lay-off arrangements
-redundancy scheme (voluntary)
 Puget Sound Naval Shipyard
Bremerton, Washington
Case Study #4
Wayne F. Williams
Michael Gaffney Our next speaker is Wayne Williams from Puget
Sound Naval Shipyard where he works as project manager. Wayne has
devoted the past 34 years to working in shipyard production or staff
functions to production. He began his career in the US.Navy and then
continued at Puget Sound as an apprentice shipfitter. At Puget Sound he
has worked as a planner, estimator, scheduler and progressman. In addi-
tion, he has spent two years working as a producrion control
superintendent in the Philbpines.
Background
Our shipyard is located in the city of Bremerton, Washington,
on the Kitsap Penninsula. It is surrounded by the waters of Puget
Sound, which is about 35 miles - one hour - away from
southwest Seattle by ferry.
Since 1891, when Congress appropriated the money, "not to
exceed $10,000," Puget Sound Naval Shipyard has existed to
provide service to the fleet. By the end of World War 11,
employment had reached a peak 32,000 compared to its present
12,000.
With the exception of the two world wars, Puget Sound Naval
Shipyard had always been isolated from the large industrial work
force areas. Many of the employees were second and third
generation workers, grandfather, father, and son. In this atmos-
phere, there developed a great pride of workmanship, and quality
was the expected norm.
In the early 1970s two other naval shipyards were closed. This
action caused a realignment of the work force in all naval ship-
yards, bringing many established shipyard workers from both the
east and west coasts to Puget Sound.
Today, our work force comes from the large commuting area
of Greater Seattle and Tacoma, as well as the Kitsap Peninsula,
with a varied background representing a fine mix of experienced
personnel.
Union Representation
The Bremerton Metal Trades Council represents most of the
employees of Puget Sound Naval Shipyard. The council is
composed of the following affiliated local unions representing
8,500 employees:
American Federation of Government Employees (AFGE), Local
#48,
International Association of Machinists and Aerospace Workers
(IAM & AW), Local #282,
United Association of Heat and Frost Insulators and Asbestos
Workers (Heat & Frost), Local #62,
International Brotherhood of Boilermakers, Blacksmiths, Forgers,
Welders, and Helpers of America (Boilermakers), Local #290,
International Union of Operating Engineers (IUOE), Local 11286,
International Molders and Foundry Workers Union (Molders),
Local #158$
Sheet Metal Workers International Association (Sheetmetal),Local
#247,
United Brotherhood of Carpenters and Joiners of America
(Carpenters), Local #1597, #2317,
United Association of Journeymen and Apprentices of the Plumb-
ing and Pipefitting Industry of the United States and Canada
(UAP), Local #63 1,
Brotherhood of Painters, Decorators, and Paperhangers of Amer-
ica, Local #1208,
International Brotherhood of Electrical Workers, Local #51P, and
Ship Scalers, Dry Dock and Miscellaneous Boatyard Workers,
Local #lo14 of the International Hod Carriers, Building and
Common Labors Union of America.
The following organizations also have their own negotiatled
agreement with the shipyard:
International Federation of Professional and Technical Engineers
(IFPTE), Local # 12, representing 1,200 employees,
Planners, Estimators, Progressmen and Schedulers Association
(PEPS), Local #6, representing 300 employees, and
Patternmakers League of North America, Seattle Association
Bremerton Branch, representing 14 employees.
Now that you know something about where we are located,
where we came from and who we are, we will discuss our involv~e-
ment with human resource innovation at Puget Sound Naval
Shipyard.
Quality Circles At Puget Sound Naval Shipyard
Puget Sound became interested in the quality circle concept in
late 1980. Our headquarters in Washington D.C., Naval Sea
Systems Command (NAVSEA), felt the need for quality
improvement, and, based upon the success of pilot programs in
other naval shipyards, suggested that all naval shipyarcls
participate in the quality circle process.
The shipyard's Productivity Improvement Steering Committee
(PISC), a group of senior managers, was commissioned to review
the recommendation by NAVSEA and decide if Puget should
become involved with quality circles. After several meetings to
discuss the advantages of the program, the PISC approved the
implementation of the concept and recommended that a program
manager be appointed to get the project started.
Program Management
The original program administrator appointed to establish the
quality circle program was selected from the existing work force
of the Project Management Section, Industrial Engineering
Division, in the Production Department. However, this later
proved to be a mistake. The person selected should have been at a
higher level, reporting directly to the Commanding Officer. This
would have given the program higher visibility and more
immediate acceptability using the top down support concept.
Union Participation
One of the first assignments of the program administrator was
to brief the unions on the quality circle concept and the shipyard's
plans for implementation. This was a successful presentation
which established the proper foundation for union support which
has continued throughout the program. Representatives of the
two major unions (Metal Trades and IFPTE), became permanent
members of the Quality Circle Steering Committee.
Program Implementation
In January of 1981, a memorandum was issued informing
shipyard managers of the planned implementation of the quality
circle program, and requesting managers and supervisors to solicit
volunteers for facilitators, circle leaders, and steering committee
members. It was later proven that a memo was not the best way
to obtain the right volunteers to start a new program. It would
have been better to request managers in key positions to volunteer,
and thus to obtain the top level of participation necessary to
implement human resource innovations. In this manner, it is
possible to obtain those key managers who wish to become
involved, and not just those who are assigned.
Quality Circle Steering Committee
In March of 1981, the shipyard formed a Quality Circle
Steering Committee (QCSC) composed of 10 people from the list
of volunteers with the program administrator as the acting
chairman. The committee selected two facilitators and twelve
leaders to receive quality circle training. The Quality Circle
Institute of Red Bluff, California, was chosen as the program
development consultant. This choice was based upon price and
availability. The consultant came on station to present the training.
At that time, both leaders and facilitators received identical
training; however, in retrospect it was found that the facilitators
should have received more extensive training, given prior to the
training of the leaders. Immediately after starting the program,
one of the original facilitators was reassigned and replaced by an
untrained individual. This caused problems and made us realize
that a backup should have been trained prior to the commence-
ment of the program.
Forming The Circles
In April of 198 1, the facilitators and leaders started the quality
circle process with the creation of eight pilot circles. The pilot
circles were to run for one year before expanding the program
further. The eight original pilot circles completed their training in
July. This training consisted of eight one-hour sessions for new
circle members. Two additional circles were further selected to
expand the program, and their training commenced in August of
1981. We have since learned that new members should be
provided one eight-hour training session instead of eight one-hour
sessions. This action generated a better comprehension of quality
circle techniques.
Program Charter
1) The shipyard issued an official memo establishing the quality
circle organization in September, 1981.
2) The quality circle program was also institutionalized in the
same month by the issuance of a shipyard instruction estab-
lishing policy, organization, and responsibilities for the
Quality Circle Program at Puget Sound Naval Shipyard.
3) However, it would have been more helpful if the charter of
the quality circle organization had been issued with a clear
statement of goals and objectives prior to the start of the
program. Similarly, the structure of the program should have
been outlined prior to the establishment of the program,
Program Expansion
The original plan was to have only eight pilot circles on a
one-year trial. The original expansion plan forecasted a total of
120 circles by 1989, but this plan was later revised to expand at a
slower rate and to achieve 120 circles by 1993. The number of
120 was chosen because it represented 10% of our total
employment assuming an average of ten employees per circle.
We later found that expansion of the program was influenced by
the availability of trained facilitators and part-time facilitators.
Twelve additional quality circle leaders were trained in anticipa-
tion of program expansion. By October 1981, training was
completed and two additional circles were formed for a total of
ten active circles. The demand for circles was so great that
expansion was being forced before proper evaluation of the
original pilot circles. By December 1981, six additional circles
completed the training. We now have a total of sixteen circles
and a second facilitator was hired to replace a retiring employee.
Expansion was happening very fast. Although originally we had
planned for eight one-year pilot circles, we now have twice that
number.
Employees' Attitudes
The quality circle committee conducted an employee attitude
survey for future reference in development of the program. They
found that the employees readily accepted quality circles as a
means of involvement, but management was skeptical. At this
point, we have not conducted a follow-up survey to determine
workers' attitudes as a result of the quality circle program.
However, we consider this an important item which must be
accomplished to evaluate properly the impact of the program.
Facilitators As Members Of Steering Committee
Facilitators were originally members of the Steering Com-
mittee. However, facilitators were later removed from the
Committee because it was felt that they might unduly influence
decisions. More recently it has been realized that input from the
facilitators is necessary for the Committee to properly function,
and they were reinstated as members in June of 1982.
I.A.Q.C. And Local Leaders' Association
As the quality circle program developed, it became involved
with the International Association of Quality Circles, Greater
Seattle Chapter. Circle leaders and members were invited to give
presentations at chapter meetings. This action proved to be
valuable in the development of a local circle leaders' association
within the shipyard. The leaders meet each week during their
lunch hour with one monthly meeting open to everyone, and
managers are especially invited to attend. The meetings are for
the purpose of discussing circle problems, solutions, and quality
circle expansion and techniques.
Part-Time Facilitators
By August of 1982, more than 20 circles were in operation and
expansion of the program continued at a brisk pace until reaching
approximately 36 circles. W e found that each facilitator could
train and manage twelve circles and still maintain a quality
program. At this time, the original expansion plan was revised to
reflect the use of part-time facilitators. Part-time facilitators would
spend no more than 20% of their time on circle activities. They
facilitate only established circles, and work with circles within
their own groups. This action allowed further expansion by
turning existing circles over to part-time facilitators, and freeing
the full-time facilitators so that they would be able to work with
three circles each, assisting with circle meetings and management
presentations, arranging training and outside contacts, reporting
circle progress to management, and keeping meetings on track
with quality circle techniques.
Program Visibility
In February of 1984, a Special Projects Office was established
to combine productivity improvement, cost reduction and quality
circles under one project manager. This action elevated the
visibility of the programs by having the project manager report
directly to the shipyard Commander. With the addition of six
part-time facilitators, the program had expanded to over 50 circles
by July of 1984.
Incentive Awards
Many of the improvements suggested by the quality circles
deserved special recognition. It was decided that the circles would
be allowed to submit their ideas to the incentive awards program,
and the circle as a whole would receive recognition and each
member an equal share of the monetary award when appropriate.
Circles may also receive management initiated awards.
Management Support/Training
It is a perception of most circle members that there is a lack of
manager/supervisor support for the program. This seems to be a
major problem. Some of the problems relate to a lack of
management understanding of quality circle techniques, lack of
budget for meetings and training, and lack of implementation and
follow-up on management presentations.
To combat the perceived lack of management/supervision
support, an eight-hour workshop was offered to managers/super-
visors. This should have been accomplished at the very beginning
of the program. All managers should have an understanding of
the concept so that support is developed prior to implementation.
As a result of the eight-hour supervisor workshop, several
management circles were started. We also have a ship superin-
tendents' circle, being composed of naval officers which we believe
is the first of its kind in the United States Navy.
The quality circle office is now presenting a fifty hour, evening
training program in conjunction with our local community
college. Five credits are being given for the class and it has
experienced capacity attendance, of both shipyard employees and
the local community.
Continued Training
Training is the key to the future success of the Quality Circle
Program at Puget Sound Naval Shipyard. The time is right and
most employees are interested. Middle management seems to
need reassurance that the technique is valid. Over the next two
years we plan to train all of our managers and supervisors in our
eight-hour workshop. W e are using our shipyard newspaper and
quality circle newsletter to provide a positive picture of qui~lity
circle activities. With quality circle techniques we are developing
positive attitudes which promote job involvement and provide an
awareness of the problem prevention process. W e stress, however,
that we are not in the quality circle business. W e are in the
improvement business.
Summary
The employment level of Puget Sound Naval Shipyard has
remained stable. Therefore, our present quality circle program
does not deal with hard economic issues, but is more a program
for employee participation and job enrichment.
Employees have been allowed to form into circles on a
completely voluntary basis and to select their own problems using
quality circle techniques. Most circles consist of employees,
without management or union involvement. The circles have not
been directed or steered into solving management-identifed
problems.
Although it is difficult to identify total return on investment
savings, the circles have documented many quality of work life
intangibles. In the long run, it may prove to be a more valua.ble
contribution than the estimated 2.2/1 cost-benefit saving has
indicated.
We consider our present quality circle program the first step in
human resource involvement, and we pass along the following
lessons learned:
1) Before starting a quality circle program, an organization
should establish the goals and objectives they wish the
program to achieve.
2) The charter and implementation instructions which establish
policy, assign responsibility and provide guidelines for
program development, should be issued prior to program
implementation.
3) Training should start with top management, facilitators, mid-
managers and first-line supervisors, prior to starting iiny
involvement at the employee level.
4) The Steering Committee should be fully trained in quality
circle techniques and represent a broad area of the organiza-
tion. It should be composed of both union and managemtnt,
and top executives such as: union president, department head,
division head, etc.
We recommend that you establish a realistic expansion plan.
You can't train everyone at once, and you can't support too rapid
an expansion without loss of enthusiasm and the quality of the
program suffering. Rate of growth should be based on proper
training of supervisors, managers, facilitators, part-time facilitators,
circle leaders, and circle members. Persistence in expanding is
more important than speed of expansion.
The frustration threshold of the facilitators and part-time facil-
itators should be very high. They field problems of both the circle
member and management. Turnover of circle members requires
constant attention, and retraining must be accomplished. Motiva-
tion and enthusiasm must be maintained. It is a constant struggle
to maintain program growth. In order to combat frustration and
maintain a state-of-the-art program, the facilitators themselves
should receive information concerning training and retraining.
Advanced schooling and network involvement is especially
helpful in this area. Facilitators must possess the staying power to
sustain the program over a long period of time until the process
takes hold at the grassroots level. Some experts believe this will
take ten years. Others say the United States is not ready and
quality circles will fail.
Management involvement consists of support and guidance.
Managers and supervisors must take an active leadership role.
Circles are constantly searching for a variety of problems from
which they may select. The participation of both employees and
management in finding solutions to common problems ensures
that circles are working toward the goals of the organization.
 Workshops
What Does All Of This Mean To Unions?
Although this conference has represented the interests of both
labor and management, there have been few presentations on
employee-involvement and work redesign by union members
themselves. To facilitate union discussion of these issues, a
workshop was held specifically for union members on the second
day of the conference. Management personnel were asked not to
attend, in order to focus the workshop's discussion on union
concerns about labor-management cooperation and to leave the
discussants free to fully voice their opinions. The workshop was a
brainstorming session centered around three issues:
-the success of labor-management programs and their benefit to
workers,
-management's commitment to employee involvement, and
-the possible weakening effects of participative activities and job
redesign on union strength in the yard and at the bargaining
table.
Success stories from yards such as Sparrows Point and
NASSCO were previously unfamiliar to many union members
present at the workshop, and an aggressive dialogue developed
between those who had experienced labor-mangement coopera-
tion activities and others who were just beginning to explore their
practicality. Specifically,union members wanted to know whether
these activities could actually help to save jobs or make a yard
more competitive and how they could tell if companies were
using participation to strengthen the business or weaken the union.
Other members asked the group just how far they thought the
union had to bend in order to make these processes worthwhile.
Workshop attendees further discussed the potential of the
employee involvement process to supplant traditional union
jurisdictions, such as the grievance procedure, workrules, and job
classifications. When management appeared willing to spend
money on employee problem-solving efforts rather than the
grievance procedure, asked union members, would the action
weaken the membership's image of its union? And finally,
participants were particularly interested in other unions' ex-
periences with work rule changes in the area of trade overlap and
concessionary bargaining on jurisdictional issues. While union
members currently involved in work redesign activities acknowl-
edged the need to alter the contract to allow for multi-skilled
work groups or composite crews in their yards, others commented
on their fear of losing bargaining power under circumstances
where the craft distinction was lost. As the session came to a
close, several members summed up their feelings on the discussion:
We know we are able to assist our employers in saving jobs and
increasing competitive standing, but feel strongly that survival of
the company should not be at the expense of the union.
Later in the afternoon, a second workshop was held for further
discussion of union concerns. Management representatives were
present as observers and towards the end of the meeting were
invited to participate. This portion of the workshop focused on a
variety of issues including:
-the ultimate goals in instigation of a labor-management
cooperation program and its role in the organization,
-the use of contractual language to spell out the goals and
groundrules of employee involvement activities,
-the need for management to re-evaluate their view of the skills
and abilities of their workforce,
-concerns over the continuation of participative practices during
economic upturn,
-whether union members committed to labor-management
activities will continue to scrutinize the process from an
objective stance,
-the role of govenment and legislation in assisting U.S.
shipbuilders,
-the importance of creating a knowledgeable and informed
workforce through exposure to the experience of other
companies and unions,
-the benefits of training as prepartion for participative activities
and everyday opportunities for problem-solving, and
--the similarities of union and management concerns over
employee involvement and the importance of mutual support.
Some workshop participants expressed additional concerns over
the length of time required to establish a conducive environ~nent
for cooperative labor-management activities. Many speakers
recognized the critical importance of trust, yet understood that it
is not easily achieved in situations which have been traditioinally
adversarial. Time is a limited resource in a declining industry and
shipbuilding is no exception. Under these circumstances, suggested
experienced union members, a neutral third party can facilitate
this building of a positive relationship between labor and
management. Often, an outsider can be of further help in the
establishment and acceptance of workplace change.
Workshop members concluded the session by expressing their
interest in future opportunities for open discussion of union
concerns and accomplishment in labor-management activities.
Several participants identified the need for a network of uriions
involved in participative programs and suggested regional nneet-
ings for all shipyards. Other members offered thier support in
making arrangements for these gatherings. This valuable exchange
of ideas and experiences was indeed a highlight for all involved.
The question, "Why would anyone want to begin an employee
involvement program?', was asked by both members of labor
and management as well as by members of the public in general.
The reasons given for establishing employee involvement within
a business vary with the respondents. Some people feel it is
"smart business." Others seek to smash the hierarchical pyramid
that exists in most corporations. The need to convey the belief
that in an organization everyone sinks or swims together is another
reason. On a more macro level, some view industry as going
through a political revolution of democratization. Americans like
getting involved and this sense of involvement should also be
applied to the workplace.
The country as a whole is facing changes that affect the way
American businesses will operate in regard to their employees.
Some claim the value system of the country has changed witlh the
aging of the "baby-boomers." This group of people is not
satisfied with passively following commands. They seek to become
part of the decision-making process. The impact of technc~logy
and the realization that American businesses are o~eratinrrin the
world market are other factors that make employee invoGelnent
programs important for the well-being of American businesses.
Many people feel that if management doesn't do something s,oon,
it ,ill wake up and find its business
 Although many arguments for the establishment of employee
involvement programs are appropriate for businesses facing
economic hard times, many have wondered whether businesses
that are doing well need to change their organizational structures
and implement employee involvement. One response to this is
that regardless of the condition of a business, employee in-
volvement can make a company more effective and efficient.
Even if you are doing well, is it not smart business to make your
company more efficient? If healthy businesses fail to change, it is
very possible that they will become "dinosaurs" in the near future.
It is important for the leader of an organization to look into the
future and try to change the organization before the future
changes.
How To Start And Sustain Employee Involvement Efforts
One suggested approach to initiating employee involvement is
change from the top down. The first step is to change the way
management manages. After this change is complete, management
should contact the union. Since there is the likelihood that
coordination problems may occur at the bottom of the organiza-
tional structure, mini-organizations ("shadow organizations" such
as quality circles) should be created for that section. Management
Resistance To Change
When organizations integrate new concepts such as quality
circles, study teams, or labor-management committees into their
workplaces, they often introduce a substantial amount of change
from the traditional way of doing business. These participative
activities have a tendency to bring about new relationships
between supervisors and workers, create new roles and respon-
sibilities for employees, and challenge the abilities of both union
and management to remain flexible. Many cooperative labor-
management activities are well structured and planned out, yet
few of them include a conscious process of how to deal with those
who choose to resist these changes.
Labor and management can be hesitant to commit themselves
to new activities for several different reasons. One explanation is
the perceived lack of communication between the planners and
participants. Employees who are not involved in the initial
generation of ideas may feel their opinions are being sidestepped
or that the information they receive concerning the activity is
being filtered through an organizing committee. Others involved
in a new concept of organization take the "we've tried it before
and it didn't work" attitude, or see the changes to their work
schedule as just plain inconvenient. If the changes taking place
appear to threaten the strength of either the union or management,
lack a clear commitment by the leaders of both sides, or imply a
lack of trust among participants, there will be a further tendency
to retreat from involvement.
Whatever the reasons for resistance, the critical question comes
down to this: what kind of approach ought we take as manage-
ment and union leaders to alleviate the problems that result from
a reluctance to accept change? If we examine the various feelings
of resistance, an underlying theme begins to surface: members of
both labor and management will respond unfavorably towards
newly designed organizations of work if they feel they have no
alternative but to accept the activity as it is presented. In other
words, employees feel trapped into carrying out "someone else's
The process of starting an employee involvement program will
be different for different companies. Companies must fashion a
program that best fits their organization. They must realize that
individuals need to be recognized and have a desire to receive
credit for the work they do. If an organization wants its employees
to behave as adults, it must start treating them as adults.
Several steps are involved in setting up an employee involve-
ment program. The first step is one of exploration and discussion.
Next, data is gathered to determine the climate and to evaluate
the employee involvement plan. After the plan is approved, pilot
groups are started. It is important that these groups are provided
with the support they need. In some cases, there may be a need
for help from consultants outside of the organization.
should explore the mini-organization establishment phase with
the commitment of changing the entire organization. Shadow
organizations provide a learning experience for management, and
management in turn should apply what it learns to the entire
organization. Quality circles cannot survive on their own. Without
a change in the pyramid of the organization, Q.C.'s will wither
and eventually die.
plan" without having an opportunity to make suggestions or deny
membership. Once this concept is understood, the initial step in
solving the problem may lie in providing an option for participants
to buy out of the activity. Employees who understand that they
have a choice over whether or not to become active and are given
a chance for a trial run will be much more likely to give the new
processes a try.
But by making involvement in labor-management activities
voluntary, won't its success be endangered if key members of the
workforce choose not to participate? Maybe so. To prepare for
this reality, labor and management must ask themselves: now that
we've established this program for the organization, what's in it
for the individual? All too often, the answer reveals that there is
really nothing extra for participation, especially in the form of
compensation. Some organizations have responded to this pro-
blem by honoring employees who exhibit the greatest support or
development of the activities at annual awards programs. Another
alternative, for management in particular, is to incorporate
participative considerations into performance appraisal where
employees are rated on the degree to which they implement the
program's philosophy. Because the workforce is often seen to be
the most valuable resource in companies initiating cooperative
activities, employees, and especially managers, are expected to
know or learn how to enhance involvement in the company and
to demonstrate how this might be carried out. It is suggested that
once managers see how benefits can be awarded for their
commitment to participative activities, their involvement may
increase.
Whether or not to direct employees to mandatorily participate
in labor management activities.is something each organization
must decide. Some managers, for example, feel uncomfortable
performing the required skills in this new activity and will need
help in problem solving, group discussion, etc. Too frequently,
management training is concentrated around the time of promo-
tion after which we expect supervisors to be proficient in all
aspects of the job. This just isn't so. As changes are introduced
into the organization, management and the employees they
supervise must be given the tools to deal with them.
How many companies actually put their training to good use?
Probably, not enough. IBM serves as one model for organizations
considering the expansion or development of a training program.
At IBM, every employee will participate in at least 28 hours of
training a year, 12 of these must be in human resource skills even
if this has nothing to do with the specific job they hold. Managers
must spend a minimum of 40 hours a year in training, 28 of
Nuts And Bolts Of Problem-Solving Teams
Programs of worker involvement with the production processes
are no longer new in many of the U.S. shipyards. Some have
already experienced using problem-solving teams for several years.
The formation of direct participation programs is, however, only
the beginning of a long process for changing organizational struc-
tures and industrial relations. Because of its unconventional
methods of decision making, it can cause difficulties for organiza-
tions. In order to successfully run problem-solving teams in
American shipyards, it is important for both management and
labor unions to recognize these difficulties and to understand the
nuts and bolts of small team activity.
One of the primary difficulties arises from the undefined nature
and position of the problem-solving teams within the organization.
In many cases they are informal groups consisting of low-echelon
workers who have very little authority to make decisions. Misun-
derstanding by middle management and the resulting low effec-
tiveness of the yard in implementing solutions often leads to the
demise of the small groups. The other important issue involves
the group's relationship to labor unions. Skepticism of labor unions
concerning worker participation can leave problem-solving teams
without adequate sanction.
Hence the first step is to clarify basic definitions as to who does
what and how in the problem-solving teams, as well as how far
they can go with management and labor unions. Two types of
team activity are possible. One type limits the activity to improv-
ing the quality of working life, where the teams select their goals
which are in human resources. While many organizations offer
training opportunities to their managers and employees, this
activity will only be of value if it targets the specific needs of the
organization. A preliminary analysis of the company, its jobs, and
employees can help an organization distinguish between a defi-
ciency of knowledge among its employees and inefficient l ~ o r k
design. Effective training and voluntary participation in l ~ o r k
change activities are just two methods of encouraging labor and
management to look to new ways of solving old problems and to
accept changes in their organizations with a more open mind.
and problems to solve. The other type is mainly for increasing
productivity, for which management chooses its goals and prob-
lems. Although it is found by workers that the first type often
generates higher enthusiasm among the participants than the
second, procedures of solving problems and implementing the
solutions must be clearly understood in either case by all members
involved in the program.
Once the structure is clear the next step is to prepare; the
participants for small group activity. Since it is based on team-
work, the efficiency of group activities greatly depends on the
basic orientation and understanding of the participants. Training
is essential for the purpose of brainstorming and cultivating lead-
ership within the group. Of all important issues concerning the
successful operation of problem-solving teams, the role of 1.eam
leaders cannot be over-emphasized. One method of creating strong
leadership is to have members select their own leaders.
Implementation of solutions directly relates to the success of
problem-solving teams. As pointed out earlier, what the teams are
permitted to do and how far they can go in the organization has
to be clearly defined. It may be wise for teams to focus on their
regular routine work so that actual changes in the production
processes are tangible and measurable. The issue of rewards relates
to the feasibility of solutions. The positve experiences of problem-
solving teams in improving quality of worklife should be tiiken
into account in creating constructive participation programs in
American shipyards.
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